1. (a) You are a manager of a firm that receives revenues of $40000 per year from product X and $90000 per year from product Y. The own price elasticity of demand for product X is -1.5, and the cross price elasticity of demand between product Y and X is -1.8. How much will your firm’s total revenues (revenues from both the products) change if you increase the price of good X by 2 percent?   

(b) The Mesa Redbirds football team plays in a stadium with a seating capacity of 1,80,000. However, during the past season, attendance averaged only 50,000. The average ticket price was 30. If price elasticity is -4, what price would the team have to charge in order to fill the stadium?

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Price elasticity percentage change in the demand for X percentage change in the demand for Y Perc... View the full answer