Question

Question for (subject macroeconomics)

1-You have estimated that the cross price elasticity of your product to be -0.9 Will your the price of your product to promote sales revenues . Explain .

2-Do you think that diminishing marginal utility function explains the purchasing decisione come Justify . (Short answer)

3-Dairies make low - fat milk from full - cream milk . In the process of making low - fat milk , the cream , which is made into ice cream . In the market for low - fat milk , the following events time . Explain the effect of each event on the supply of low - fat milk . ( 1 ) With advice from health - care experts , dairy farmers decide to switch from producing 18 cream milk to growing vegetables . ( ii ) A new technology lowers the cost of producing ice cream . (Short answer)

4-China is rapidly changing , and tea - drinking habits are no exception . Chinese consumers have discovered coffee and some observers suggest that the fast pace of current day China is more compatible with other drinking than tea . With new and large populations now interested in coffee , the world demand ter coffee shifts rightward . This is good news for coffee growers . Based on scenario what will be the possible impaa on supply and price of coffee in Chinese economy ? (Short answer)

5-You have estimated that the cross price elasticity of your product to be 1.5.Will you nee the price of your product to promote sales revenues . Explain . ( Short answer)

Answer 1

1. When cross price elasticity of a product is lless than zero, that suggests that the goods are complements of each other. Which means that when the price of one good would increase, it would lead to a fall in the demand of other good too.

In order to increase the sales revenue, price of good y could be decreased. this in turn would lead to an increase in the demand for good x hence leading to rise in sales revenue.

Cross Price Elasticity of Demand = Percentage in Quantity demanded of X/ Percentage change in Price of Y

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