a. How much will Cikli's total revenue change for product X? b. How much is Cikli's new total revenue for both of the products? c. Plot a graph for product X and another for product Y, showing the before and after change in price.
a. How much will Cikli's total revenue change for product X? b. How much is Cikli's new total revenue for both of the products? c. Plot a graph for product X and another for product Y, showing the before and after change in price.
Chapter5: Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 1.3P: (Categories of Price Elasticity of Demand) For each of the following absolute values of price...
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Transcribed Image Text:1. Cikli is the manager of a firm that receives a revenue of RM3000
per month from product X and RM7000 per month from product
Y. The price elasticity of demand for product X is -2.5 when
original quantity (Q) for X and Y are 150 and 175 units,
respectively and the cross price elasticity of demand between
product X and Y is 1.1. If Cikli increases the price of good X by
1%.
a. How much will Cikli's total revenue change for product X?
b. How much is Cikli's new total revenue for both of the products?
c. Plot a graph for product X and another for product Y, showing
the before and after change in price.
d. Give an appropriate example for each product.
2. Zulaikha and Ker Xin went to a shop to buy rice. Zulaikha wanted
to buy 10kg of rice and Ker Xin wanted to buy RM20 worth of
rice. Find the price elasticity of demand for each of them.
3. Nadzif always spends one-fifth of his income on food. Calculate
his income elasticity of demand (use the midpoint formula).
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