Suppose a firm produces two products, X and Y. The firm earns revenues from X equal to $70,000 and revenues from Y equal to $60,000. The own price elasticity of demand for Xis-1.5 and the cross-price elasticity of demand between X and Y is -0.80. If the firm decreases the price of product X by 1%, the change in total revenues will be $

Suppose that the demand for sweatshirts at the university bookstore is given by: P = 40 – 0.2Q A) Using the point elasticity method, price elasticity of demand at a price of $8 is  B) Is the demand for sweatshirts elastic or inelastic at the price of $8?

Using data on automobile purchases, P. McCarty (REStat 1996) estimated the following elasticities for compact cars sold in the United States. Own elasticity of demand Income Elasticity Cross Price* - 0.87 1.70 .82 * Responsiveness of demand for compact cars to changes in the price of other types of car models, such as luxury cars. а) What is the percent change in quantity demanded for compact cars given a 2 percent decrease in the price of compact cars? b) What is the percent change in demand for compact cars given a 2 percent decrease in the price of other car models? c) What is the percent change in demand for compact cars given a 2 percent decrease in income? d) Is demand for compact cars elastic or inelastic? Explain briefly. e) Would a decrease in the price of compact cars generate more or less revenue from the sale of compact cars? f) Are compact cars a normal or inferior good? Explain briefly. 5.

An entrepreneur's most recent venture is selling robots that he builds and programs himself. At a price of $160 each, he sells 660 robots. At a price of $290 each, he sells 340 robots. What is the price elasticity of demand for his robots? Present your elasticity using its absolute value.