Cross-price elasticity of demand between goods

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Reference no: EM13816943

1. Suppose the own price elasticity of demand for good X is -4, its income elasticity is 3, its advertising elasticity is 4, 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 4 percent.

b. The price of good Y increases by 9 percent.

c. Advertising decreases by 2 percent.

d. Income increases by 3 percent.

2. 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 40 percent?

Reference no: EM13816943

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