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As the manager of a factory that is producing Good X, you have been studying themacroeconomy for some time and have also been examining other...
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As the manager of a factory that is producing Good X, you have been

studying the macroeconomy for some time and have also been examining other markets, such as that of Good Y. 
You've jotted down the following notes: 
                       Consumer income: estimated to increase over the next year
                       Income elasticity of demand for Good X = -0.75
                       Cross-price elasticity of demand for Good X (with Good Y) = -1.9


           The CEO asks you to analyze what might happen to the equilibrium price and quantity of      Good X under the following scenarios (treat each scenario separately using  supply/demand diagrams; in the blanks below, write "increase", "decrease", or            "indeterminate"): 


           a) the impact on the market for Good X with the increase in consumer income at the                          same time that production costs for Good X have risen significantly  




                       Equilibrium Price _______________  Equilibrium Quantity _______________




b) the impact on the market for Good X with an increase in the price of Good Y  


           Equilibrium Price _______________ Equilibrium Quantity _______________


c) the impact on the market for Good X if production costs for that product decrease, at the same time the number of suppliers is increasing in the market for Good Y  


      Equilibrium Price ________________  Equilibrium Quantity ______________

Step-by-step answer

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Subject: Business, Economics

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