Answer to Question #228180 in Economics of Enterprise for Clement Paul

Question #228180

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: (a) The price of good X increased by 5 percent, (b) the price of good Y increase by 10 percent, (c) Advertising decreases by 2 present, (d) income falls by 3 percent


1
Expert's answer
2021-08-24T00:29:01-0400

i)The quantity demanded decreases by 2×5=10%2×5=10\%

ii) The quantity demanded decreases by 6×10=60%6×10=60\%

iii)The quantity demanded decreases by 2×4=8%2×4=8\%

iv) The quantity demanded decreases by 3×3=9%3×3=9\%


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