Suppose the own price elasticity of demand for good X is -5, its income elastici

Question

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

Instructions: Enter your answers as percentages. Include a minus (-) sign for all negative answers.

a. The price of good X decreases by 5 percent.

percent

b. The price of good Y increases by 8 percent.

percent

c. Advertising decreases by 2 percent.

percent

d. Income increases by 4 percent.
percent

Explanation / Answer

a)the consumption of good would increase by 25%(+25%)

b)the consumption of good would increase by 32%(+32%)

c)the consumption of good would decrease by 6%(-6%)

d)the consumption of good would increase by 4%(+4%)

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