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Cross Price Elasticity of Demand

# Cross Price Elasticity of Demand - Suppose that Py1 = \$1.00...

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Unformatted text preview: Suppose that: Py1 = \$1.00 and Qx1 = 100 Py2 = \$1.50 and Qx = Demand (3) Calculation of Cross Price Elasticity2of 120 Suppose that: of Cross \$1.00Elasticity of= 100 Calculation Py1 = Price and Qx1 Demand Suppose that: y2 = \$1.50 and Qx 100 120= \$1.50 and P Py1 = \$1.00 and Qx1 = 2 = Py2 16 When there are “big” percentage changes in prices and quantities, one can calculate in arc cross-price elasticity of When there are “big” percentage changes anprices and quantities, one can cdemand: arc cross-price elasticity of demand: alculate an 19 When there are “big” percentage changes in prices and quantities, one can calculate an arc cross-price elasticity of demand: Cross-Price Elasticity of Demand The cross-price elasticity of demand is Cross-Price Elasticity of Demand The cross-price elasticity of demand is Suppose that Qx= 6 - 1 Px + 2 Py + .002 M, where Px = \$1 and M = \$2000. What is the income elasticity of demand when Py = \$2? Suppose that Q Px \$1 Py x + 2 Py = .002 in where Px = \$1 Answer: Substituting x ==6 -, 1 P= \$2 and M + \$2,000M,the demand equation andgives= \$2000. What is the income elasticity of demand when Py M Qx = 14. From the definition above, = \$2? Answer: Substituting Px = \$1, Py = \$2 and M = \$2,000 in the demand equation gives Qx = 14. From the definition above, . = \$2? Answer: Substituting Px = \$1, Py = \$2 and M = \$2,000 in the demand equation gives Qx = 14. From the definition above, . Note that , so . © Bryan L. Boulier, 2010. All rights reserved. ...
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