Ask Question
11 January, 00:55

Suppose the own-price elasticity of demand for good X is - 3, its income elasticity is 1, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Y is - 4. Determine how much the consumption of this goodwill change if the price of good X decreases by 5 percent.

+3
Answers (1)
  1. 11 January, 04:15
    0
    Consumption of good will increase by 15%

    Explanation:

    Price Elasticity of Demand : is demand responsiveness to price change.

    Ped = Percentage change in demand / percentage change in price

    Ped = %ΔQ / %ΔP

    %ΔP = - 5; Pe = - 3 [Given]

    As per formula:

    -3 = %ΔQ / - 5

    %ΔQ = (-3) X (-5) = + 15%

    Percentage change (increase) in Quantity = 15%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Suppose the own-price elasticity of demand for good X is - 3, its income elasticity is 1, its advertising elasticity is 2, and the ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers