What is cross price easticity of demand, Managerial Economics

Assignment Help:

For some time, two firms have charged $0.90 per standard unit of crating materials for shipping a particular type of machine tool and each has been selling about 20,000 units per month. Last month, U-Pak-It reduced its price to $0.80 per unit and its volume increased to 25,000 units. During that month, Boxit (the other company) maintained its price at $0.90 but saw its volume decline to 17,000 units.

a. What is the price elasticity of demand facing U-Pak-It?

b. What is Boxit's cross-price elasticity of demand for U-Pak-It price changes?

c. If the price elasticity of demand for Boxit is the same as that for U-Pak-It, what price reduction for Boxit would be required to increase its monthly volume back to 20,000 units per month?


Related Discussions:- What is cross price easticity of demand

Describe the gift exchange model of reciprocity, Q. Describe the gift excha...

Q. Describe the gift exchange model of reciprocity? George Akerlof (1982) develops a gift exchange model of reciprocity in that employers offer wages unrelated to variations in

Fiscal policy, Meaning of Fiscal Policy In this general theory, Keynes ...

Meaning of Fiscal Policy In this general theory, Keynes used fiscal policy when referring to the influence of taxation on saving and government investment spending financed thr

Draw demand schedule and demand curve, The war on drugs is an expensive bat...

The war on drugs is an expensive battle, as a great deal of resources go into catching those who buy or sell illegal drugs on the black market, prosecuting them in court, and housi

Search theory and unemployment, Search Theory and Unemployment   You mu...

Search Theory and Unemployment   You must understand the search and matching theories of unemployment in  the context of other theories of unemployment. With this objective  in

Keynesian theory of consumption function, THE KEYNESIAN THEORY OF CONSUMPTI...

THE KEYNESIAN THEORY OF CONSUMPTION FUNCTION The theory was developed during the Great Depression which plagued Europe and America.  During this time, there was excess capacit

Determine the giffen goods - law of demand, Determine the Giffen goods - la...

Determine the Giffen goods - law of demand An exception to this law is the distinctive case of Giffen goods named after Sir Robert Giffen (1837-1910). 'Giffen goods' doesn't re

Elasticity of demand, a. Explain why the demand for a particular brand is m...

a. Explain why the demand for a particular brand is more elastic than the demand for all cigarettes. If Lucky Strike raised its price by 1% in 1918, was the price elast

Costs of economic growth, Costs of Economic Growth (Increase in National In...

Costs of Economic Growth (Increase in National Income) 1.     People living in industrial towns suffer from the effects of a polluted atmosphere. 2.     The manufacture of

Cross elasticity, Cross Elasticity Cross elasticity of demand measures...

Cross Elasticity Cross elasticity of demand measures the degree of responsiveness of the quantity demanded of one good (B) to changes in the price of another good (A).  It is

Definition of perfect competition, 1. Prof. Marshall 'The more nearly perfe...

1. Prof. Marshall 'The more nearly perfect a market is, the stronger is the tendency for same price to be paid for same thing at the same time in all parts of the market". 2. Pr

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd