The demand for mini cassette players can be characterized

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Reference no: EM131007976

The demand for mini cassette players can be characterized by the following point elasticities: own price elasticity= 2 in absolute value, cross price elasticity with AA alkaline batteries= -1.5, and income elasticity = 3. Indicate whether each of the following statements is True or False and explain.

a) a price increase for cassette players will decrease both the number of units demanded and the total revenue of sellers

b) the cross price elasticity indicates that a 2% reduction in the price of cassette players will cause a 3% increase in the battery demand

c) demand for the cassette players is price elastic and they are normal goods

d) falling battery prices will definitely increase revenues received by the seller of both cassette players and batteries

e) a 3% price reduction in cassette players would be necessary to overcome the effects of a 2% decline in income

Reference no: EM131007976

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