Apple and Samsung are two competing brands in smartphone device market. Suppose that when the price of Apple is $1000 the quantity demanded is 28,000 units per month. When its price increases to $1200 monthly quantity demanded decreases to 24,000 units per month. Although there is no change in Samsung device prices, due to the change in Apple prices, demand for Samsung devices changes from 12,000 units per month to 16,000 units to per month. a. Calculate the price elasticity of demand for Apple devices by using the mid point method K b. Calculate the cross price elasticity of demand for Apple and Samsung devices and decide what type of relationship is there between two brands

Apple and Samsung are two competing brands in smartphone device market. Suppose that when the price of Apple is $1000 the quantity demanded is 28,000 units per month. When its price increases to $1200 monthly quantity demanded decreases to 24,000 units per month. Although there is no change in Samsung device prices, due to the change in Apple prices, demand for Samsung devices changes from 12,000 units per month to 16,000 units to per month. a. Calculate the price elasticity of demand for Apple devices by using the mid point method K b. Calculate the cross price elasticity of demand for Apple and Samsung devices and decide what type of relationship is there between two brands

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Reading Comprehension Producers and consumers Once people could only trade what they could produce with their hands or find in nature for things that other people had made. Then money became a medium of exchange and economic systems were created. Today, developments in industry and technology have enabled vast quantities of goods to be manufactured, transported, and traded, and a range of services like insurance, banking and retail have also appeared. In the digital age, services such as online shopping have made selling goods even easier and trade is now more global than ever. Have these transformations made our lives better? The most obvious benefits of trade relate to consumer choice. There are so many goods and services to choose from that shopping has now become a leisure activity for many people. The internet has also allowed shoppers to compare prices and choose the best deal. However, there are winners and losers; not all consumers have enough disposable income to be able to…
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