You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: guppy gumi flopsicles, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know th complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of guppy gummies decreases by 4%, the quantity of flo sold increases by 5% and the quantity of kipples sold decreases by 5%. Your job is to use the cross-price elasticity between guppy gummies other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the cross-price elasticity between guppy gummies and flopsicles, and then betw guppy gummies and kipples. In the second column, determine if guppy gummies are a complement to or a substitute for each of the goods li Finally, complete the final column by indicating which good you should recommend marketing with guppy gummies. Relative to Guppy Gummies oss-Price Elasticity of mand Complement or Subst Recommend Marketing with Guppy Gummies Flopsicles Kipples
You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: guppy gumi flopsicles, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know th complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of guppy gummies decreases by 4%, the quantity of flo sold increases by 5% and the quantity of kipples sold decreases by 5%. Your job is to use the cross-price elasticity between guppy gummies other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the cross-price elasticity between guppy gummies and flopsicles, and then betw guppy gummies and kipples. In the second column, determine if guppy gummies are a complement to or a substitute for each of the goods li Finally, complete the final column by indicating which good you should recommend marketing with guppy gummies. Relative to Guppy Gummies oss-Price Elasticity of mand Complement or Subst Recommend Marketing with Guppy Gummies Flopsicles Kipples
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: guppy gummies,
flopsicles, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new
advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that
complements are typically consumed together while substitutes can take the place of other goods.
Run-of-the-Mills provides your marketing firm with the following data: When the price of guppy gummies decreases by 4%, the quantity of flopsicles
sold increases by 5% and the quantity of kipples sold decreases by 5%. Your job is to use the cross-price elasticity between guppy gummies and the
other goods to determine which goods your marketing firm should advertise together.
Complete the first column of the following table by computing the cross-price elasticity between guppy gummies and flopsicles, and then between
guppy gummies and kipples. In the second column, determine if guppy gummies are a complement to or a substitute for each of the goods listed.
Finally, complete the final column by indicating which good you should recommend marketing with guppy gummies.
Relative to Guppy Gummies
ross-Price Elasticity of emand Complement or Subs
Recommend Marketing with Guppy ummies
Flopsicles
Kipples
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