Mini mill steel company estimated the subsequent

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Reference no: EM1321521

Q. Cost Elasticity. The management of the Mini Mill Steel Company estimated the subsequent elasticities for a unique type of steel: ep (cost elasticity) = -2, eI (income elasticity) = 1 also eXY (cross cost elasticity) = 1.5 where X refers to steel also YY to aluminum. Next Yr the firm would like to increase the cost of the steel it sells by 6%. The management forecasted that income will rise by 4% next yr also that the cost of aluminum will fall by 2 %.

A. If the sales this yr are 1,200 tons of the steel, how so many tons can the firm expect to sell next yr?

B. By illustrate what percent (%) must the firm change the cost of steel to keep its sales at 1,200 tons next yr?

Reference no: EM1321521

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