You are a manager in charge of monitoring cash flow at a major publisher. Paper books comprise 70percent of your revenues, which grow about 4percent 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 $300million from sales of ebooks and about $700million from sales of paper books.

If your data analytics team estimates the own price elasticity of demand for paper books is 2.5, how will a 4percent 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 how much $ (million).