PRICE ELASTICITY QUESTIONS

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PRICE ELASTICITY QUESTIONS

1.Suppose the own price elasticity of demand for good X is -3, its income elasticity is 1, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Y is -4. Determine how much the consumption of this good will change if: (A) The price of good X decreases by 5 percent. (B) The price of good Y increases by 8 percent. (C) Advertising decreases by 4 percent. (D) Income increases by 4 percent.

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