You are the manager of a firm that receives revenues of 50,000 AED per year from product X and 40,000 AED per year from product Y. The own price elasticity of demand for product X is −1.25 and the cross-price elasticity of demand between products Y and X is −1.5. How much will your firm’s total revenues (revenues from both products) change if you increase the price of good X by 2 percent?

It is given that the revenue from good X is $50,000 and that from good Y is $40,000. The price…

Answered: You are the manager of a firm that…

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter7: Consumer Choice And Elasticity

Section: Chapter Questions

Problem 9CQ

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You are the manager of a firm that receives revenues of 50,000 AED per year from product X and 40,000 AED per year from product Y. The own price elasticity of demand for product X is −1.25 and the cross-price elasticity of demand between products Y and X is −1.5. How much will your firm’s total revenues (revenues from both products) change if you increase the price of good X by 2 percent?

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