3. Problem 3Consider that the own price elasticity of demand for X is -0.5, income elasticity is 1,advertising elasticity is 1.5, and cross price elasticity between X and Y is 2.3.1 Determine the change in consumption of X if the Px decreases by 3 percent.3.2 Determine the change in consumption of X if the Py increases by 5 percent.3.3 Determine the change in consumption of X if advertising decreases by 3 percent.3.4 Determine the change in consumption of X if income increases by 5 percent.

Change in consumption – Refers to the change in consumption (of a good, service, or general…

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Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 2E: The price elasticity of demand for personal computers is estimated to be 2.2. If the price of...

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3. Problem 3
Consider that the own price elasticity of demand for X is -0.5, income elasticity is 1,
advertising elasticity is 1.5, and cross price elasticity between X and Y is 2.
3.1 Determine the change in consumption of X if the Px decreases by 3 percent.
3.2 Determine the change in consumption of X if the Py increases by 5 percent.
3.3 Determine the change in consumption of X if advertising decreases by 3 percent.
3.4 Determine the change in consumption of X if income increases by 5 percent.

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