Answer to Question #275663 in Microeconomics for sarah

Question

 Assume now that you do not think incomes will change, but that you expect  your competitor will decrease his price by 4%. Assuming that your company  does not change the price of its aircrafts, how many would you expect your  company will sell this year?

Answer 1

B.

$E(AB)d=\frac{\Delta QA}{\Delta QB}$

$1.6=\frac{\Delta QA}{-4}$

$\Delta QA=-6.4$

$-6.4=\frac{Q2-Q2}{Q2+Q1}=\frac{Q2-40000}{Q2+40000}$

-7.4Q2=-296000

Q2=40000