1)

Suppose the own price elasticity of demand for goodXis 5, its income elasticity is 3, its advertising elasticity is 3, and the cross-price elasticity of demand between it and goodYis 5. Determine how much the consumption of this good will change if:

Instructions:Enter your responses as percentages. If you are entering a negative number, be sure to use a () sign.

a. The price of goodXdecreases by 6 percent.

percent_____

b. The price of goodYincreases by 7 percent.

percent_______

c. Advertising decreases by 4 percent.

percent______

d. Income increases by 2 percent.

percent______

2)You are the manager of a firm that receives revenues of $60,000 per year from productXand $90,000 per year from productY. The own price elasticity of demand for productXis 1, and the cross-price elasticity of demand between productYandXis 1.2.

How much will your firm's total revenues (revenues from both products) change if you increase the price of goodXby 1 percent?

3)If Starbucks's data analytics department estimates the income elasticity of demand for its coffee to be 2.2, how will the prospect of an economic bust (expected to decrease consumers' incomes by 2 percent over the next year) impact the quantity of coffee Starbucks expects to sell?

Instruction:Enter your response rounded to two decimal places.

It will change by______percent.

4)You are a manager in charge of monitoring cash flow at a major publisher. Paper books comprise 60percent of your revenues, which grow about 2percent annually. You recently received a preliminary report that suggests the growth rate in ebook reading has leveled off, and that the cross-price elasticity of demand between paper books and ebooks is 0.5. In 2019, your company earned about $400million from sales of ebooks and about $600million from sales of paper books.

If your data analytics team estimates the own price elasticity of demand for paper books is 2, how will a 3percent decrease in the price of paper books affect your overall revenues from both paper books and ebooks sales?

Instructions:Enter your response rounded to one decimal place.

Your overall revenues will change by $_______million.