MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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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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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?
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
Suppose the own price elasticity of demand for good X is -5, its income elasticity is 2, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is 3. Determine how much the consumption of this good will change if Income increases by 2 percent.
Chapter 3 Solutions
MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
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 own price elasticity of demand for good X is -2, its income elasticity is 3, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Y is -4. Determine how much the consumption of this good will change if b. The price of good Y increases by 8 percent. percentc. Advertising decreases by 4 percent. percentarrow_forwardSuppose the own price elasticity of demand for a good X is −5, its income elasticity is −1, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is 3. Determine how much the consumption of this good will change if: The price of good X decreases by 6%. The price of good Y increases by 7%. Advertising decreases by 2%. Income increases by 3%.arrow_forwardSuppose the own price elasticity of demand for good X is -3, its income elasticity is 1, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Y is -4. Determine how much the consumption of good X will change if: The price of good X decreases by 5% The price of good Y increases by 8% Advertising decreases by 4% Income increases by 4%arrow_forward
- 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%. thanksarrow_forwardSuppose the own price elasticity of demand for good X is –3, its income elasticity is 1, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Y is –4. Determine how much the consumption of this good will change if: a. The price of good X decreases by 5 percent. b. The price of good Y increases by 8 percent. c. Advertising decreases by 4 percent. d. Income increases by 4 percent.arrow_forwardSuppose 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_forward
- Suppose the cross-price elasticity of demand between goods X and Y is -5. How much would the price of good Y have to change in order to change the consumption of good X by 50 percent?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_forwardA 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_forward
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