Explain what would happen to the demand for motorola

Reference no: EM1329040

Income Elasticity explained in this solution

I have the following data about the demand for Motorola picture phones:

(own) price elasticity = -.12
cross-price elasticity with digital cameras = +3
income elasticity = +.15.

If the goal of Motorola was to increase total sales revenue (ignoring cost considerations), would it raise or lower its selling price? Why?

What would happen to the demand for Motorola picture phones if the price of digital cameras rose by 2%? Are the two goods substitutes or complements?

What would happen to the demand for Motorola picture phones if consumer income rose by 10%? Are picture phones a normal or an inferior good?

Reference no: EM1329040

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