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YOU HAVE THE FOLLOWING INFORMATION FOR YOUR PRODUCT: THE PRICE ELASTICITY OF DEMAND IS -2.0 THE...

YOU HAVE THE FOLLOWING INFORMATION FOR YOUR PRODUCT:

THE PRICE ELASTICITY OF DEMAND IS -2.0

THE INCOME ELASTICITY OF DEMAND IS 1.5

THE CROSS-PRICE ELASTICITY OF DEMAND BETWEEN YOUR GOOD AND A RELATED GOOD IS -3.5.

WHAT CAN YOU DETERMINE ABOUT CONSUMER DEMAND FOR YOUR PRODUCT FROM THIS INFORMATION?

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Answer #1

Ans: You have the following information given for product-

The price elasticity of demand is -2. 0

The income elasticity of demand is 1.5

The cross-price Elasticity of Demand between your good and related good is -3. 5

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