Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 3, Problem 4CACQ
Suppose the own
- The price of good X decreases by 5 percent.
- The price of good Y Increases by 8 percent.
- Advertising decreases by 4 percent.
- Income Increases by 4 percent
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Check out a sample textbook solutionStudents have asked these similar questions
You have the following information for your product:
The price elasticity of demand is -0.9.
The income elasticity of demand is 0.5.
The cross-price elasticity of demand between your good and a related good is 0.
What can you determine about consumer demand for your product from this information?
Please help with following question
Suppose the own price elasticity of demand for good X is -4, its income elasticity is 2, its advertising elasticity is 3, and the cross price elasticity of demand between it and good Y is -6. Determine how much the consumption of this good will change if:
The price of good X increases by 10%.
The price of good Y decreases by 5%.
Advertising increases by 14%.
Income decreases by 8%.
thanks
Suppose the own price elasticity of demand for good X is −2, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is −6. Determine how much the consumption of this good will change if:Instructions: Enter your responses as percentages. If you are entering a negative number, be sure to use a (−) sign.a. The price of good X decreases by 5 percent. percentb. The price of good Y increases by 10 percent. percentc. Advertising decreases by 2 percent. percentd. Income increases by 3 percent.
percent
Chapter 3 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Ch. 3 - Prob. 1CACQCh. 3 - The demand curve for a product is given by...Ch. 3 - Prob. 3CACQCh. 3 - Suppose the own price elasticity of demand for...Ch. 3 - Suppose the cross-price elasticity of demand...Ch. 3 - You are the manager of a firm that receives...Ch. 3 - A Quant jock from your firm used a linear demand...Ch. 3 - Prob. 8CACQCh. 3 - Prob. 9CACQCh. 3 - Prob. 10CACQ
Ch. 3 - Prob. 11PAACh. 3 - Prob. 12PAACh. 3 - For the first time in two years, Big G (the cereal...Ch. 3 - Prob. 14PAACh. 3 - You are a division manager at Toyota. If your...Ch. 3 - You are a manager in charge of monitoring cash...Ch. 3 - As newly appointed Energy Czar. your goal is to...Ch. 3 - As the owner of Barneys Broilers—a fast-food...Ch. 3 - Prob. 19PAACh. 3 - With milk sales sagging of late. The Milk...Ch. 3 - Prob. 21PAACh. 3 - Prob. 22PAACh. 3 - Prob. 23PAA
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- Prove that price elasticity of demand is not the same as the slope of a demand curve.arrow_forwardSuppose a movie theater raises the price of popcorn 10 percent, but customers do not buy any less popcorn. What does this tell you about the price elasticity of demand? What will happen to total revenue as a result of the price increase?arrow_forwardUsing the following equation for the demand for a good or service, calculate the price elasticity of demand (using the point form), cross-price elasticity with good x and income elasticity. Q=82P+0.10I+Px Q is quantity demanded, P is the product price. P1 is the price of a related good, and I is income. Assume that P= $10, I = 100, and Px = 20.arrow_forward
- Suppose the quantity demanded of good x has increased from 60 to 80 units, due to a decrease in its price from OR 4 to 2. Calculate the price elasticity of demand.arrow_forwardSuppose the own price elasticity of demand for good X is −0.5, and the price of good X increases by 10 percent. We would expect the quantity demanded of good X to: decrease by 20 percent. increase by 5 percent. decrease by 5 percent. increase by 20 percent.arrow_forwardWhen price is $5, 20 units of a good are sold. When price is $9, 10 units are sold. Calculate the price elasticity of demand for this good over this price range using the midpoint formula. Calculate the elasticity when price is exactly $9 using the formula for point elasticity. Show your work.arrow_forward
- A 10 percent decrease in the price of coffee leads to a 20 percent decrease in the quantity of tea demanded. What can we conclude from this information? The elasticity of demand for tea is 2 and is elastic. The cross-price elasticity of demand for tea is -2. The cross-price elasticity of demand for coffee is -0.5. The elasticity of demand for coffee is 0.5 and is inelastic.arrow_forwardSuppose the cross-price elasticity of demand between DVDs at Amazon.com and DVDs at Rakuten.com is 3.5. Based on this information, predict what happens when Amazon.com lowers its DVD prices by 10 percent. The quantity of DVDs demanded on Amazon.com will decrease by 35 percent. The quantity of DVDs demanded on Amazon.com will increase by 35 percent. The quantity of DVDs demanded on Rakuten.com will decrease by 35 percent. The quantity of DVDs demanded on Rakuten.com will increase by 35 percent.arrow_forwardSuppose the own price elasticity of demand for good X is -2, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is -6. Determine how much the consumption of this good will change if: 0 the price of good X increases by 5 percent. 2 The price of good Y increases by 10 percent. 3Advertising decreases by 2 percent. Income falls by 3 percent hparrow_forward
- Suppose the own price elasticity of demand for good X is -4, its income elasticity is -2, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is 2. Determine how much the consumption of this good will change if: Instructions: Enter your responses as percentages. Include a minus (-) sign for all negative answers. a. The price of good X decreases by 6 percent. percentarrow_forwardQuestion 18.18. You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than 1. To increase total revenues, you should: increase the price of the software. decrease the price of the software. hold the price of the software constant. increase the supply of the software. Question 19.19. A state government wants to increase the taxes on cigarettes to increase tax revenue. This tax would only be effective in raising new tax revenues if the price elasticity of demand is unity. elastic. inelastic. perfectly elastic. Question 20.20. Movie theaters charge lower prices to see a movie in the afternoon than in the evening because there is an inelastic supply of movies in the evening. elastic demand to see movies in the evening. elastic demand to see movies in the afternoon. inelastic demand to see movies in the afternoon.arrow_forward2. Consider the following demand function for the good X:QX = 14 − 2PX + 0, 1R − 0, 5PY . 2.1. Finding the Price Elasticity of Demand (ƐP,D) , Income elasticity of demand (ƐR,D) and Cross-elasticity of demand (ƐC,D ). Use the values PX = 5, PY = 2 y R = 20. Interpret the results. 2.2. Are X and Y substitute or complementary goods? Explain your answerarrow_forward
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