What is the cross price elasticity of demand

Reference no: EM13204282

XYZ Corporation is a manufacturer of widgets. Over the past several months, it has been selling its widgets for $100 each and unit sales have averaged 5,000 units per month. This month its competitor, ABC, Inc. raised the price of its widgets from $100 to $110. XYZ noted that its unit sales increased by 200 units.

a. What is the cross price elasticity of demand between XYZ's and AB C's widgets?

b. If XYZ knows that the price elasticity of demand for its widgets is -2.0, what price would XYZ be able to charge and still sell 5,000 widgets, assuming ABC keeps its price at $110?

Reference no: EM13204282

Questions Cloud

Explain the cheetah starts towards the gazelle : A cheetah spots a gazelle 132 meters away. The cheetah starts towards the gazelle at a speed of 18 meters per second. At the same instant, the gazelle starts moving away at 11 meters per second.

Find the volume of a propane tank of cylindrical length : one on each end. The radius of the cylinder is the same as the radius of each half-sphere. What is the volume of a propane tank of cylindrical length 10 ft and radius 5 ft, correct to the nearest whole cubic foot?

Use the method of shells to compute the volume of the solid : Use the method of shells to find the volume of the solid obtained by revolving the region bounded by the given curves about the y - axis.

The corners to form the box with maximum capacity : You have a rectangular piece of cardboard that you want to fold into a box. It occurs to you that you can cut out an equal square from each corner of the rectangle, make a crease along each side and fold them up.

What is the cross price elasticity of demand : XYZ Corporation is a manufacturer of widgets. Over the past several months, it has been selling its widgets for $100 each and unit sales have averaged 5,000 units per month. This month its competitor, ABC, Inc. raised the price of its widgets from..

Explain how to convert the to an algebraic expression : the permit fees are $200 for first $10,000 + $16 for each additional $1,000, or fraction thereof, to and including $25,000. How to convert this to an algebraic expression.

Describe wage determination in a labor market : Describe wage determination in a labor market in which workers are unorganized and many firms actively compete for the services of labor. Show this situation graphically, using W1 to indicate the equilibrium wage rate and Q1 to show the number of ..

What is the present worth of the extra cost over a year : If the incremental cost of the sequestration process is $.019 per kilowatt-hour, what is the present worth of the extra cost over a 3 year period to manufacture plant that uses 100,000 kWh of power per month, if the interest rate is 12% per year c..

Determine the equivalent cost per month at an interest : Copper Refiner Phelps Dodge purchased a model MTVS peristaltic pump for injecting antiscalant at ite nanofitration water conditioning plant. The cost of the pump was $950. If the chemical cost is $10 per day, determine the equivalent cost per mont..

User Account

All Pages