Ch3. HW #5 help.jpg

Ch3. HW #5 help.jpg - hnohaurdhuAd-nI-F Out-hm-Ihm-Ih"Qdhi...

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Unformatted text preview: h—nohﬂ—au—rﬁdh—u—Ad-n—I-F- Out-h—m-Ihm—ﬁ-I—h "—Qﬂdﬂh—i-‘ﬂ'..__ I.- _l .- u-nnu—u- d h- .n—I I. A... n s The price ofgood X increases by 5 percent b. The price ofgood Y increases by 10 percent c. Advertising decreases by 2 percent d. Income falls by 3 percent Price elasticity of demand: % change in quantity Fri: change in price Income elasticity of demand = "A: change in quantity 1' "A: change in income Advertising elasticity of demand = % change in quantity! % change in advertising Cross-price elasticity of demand = “A: change in quantity X I "A: change in price on a. The price ofgood X increases by 5 percent = -2 X 5%=- 0.1 b. The price ofgood Y increases by 10 percent = -6 X 10%: - 0.6 c. Advertising decreases by 2 percent = 4X -2%= -0.8 d. Income falls by 3 percent =3 X -3%= -0.9 ...
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