Use the following scenario. You are a consultant and have been
employed by Urban General, a large inner-city hospital, to estimate
the demand for its services. Your research indicates that the
income elasticity of demand for the target market is +0.50; the
price elasticity of demand is -0.15; and the cross-price elasticity
of demand with respect to the price of services at St. Elsewhere, a
near-by hospital, is +0.35. Answer the following question,The price
of services at Urban General falls by 10 percent.
Question 8 options:
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1)
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Quantity demanded at Urban General increases by 15.0
percent. |
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2)
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Quantity demanded at Urban General increases by 1.5
percent. |
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3)
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Quantity demanded at St. Elsewhere rises by 3.5 percent. |
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4)
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Quantity demanded at St. Elsewhere falls by 5.0 percent. |
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5)
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Quantity demanded at Urban General rises by 5.0 percent. |
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