Question
You are the manager of a firm that receives revenues of $175,000 per year from product X and $50,000 per year from product Y .
You are the manager of a firm that receives revenues of $175,000 per year from product X and $50,000 per year from product Y . Both products have similar production costs. 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 1.6. The end of the quarter is approaching and you are feeling pressured to increase the firm's revenues. To that end, one of your colleagues suggests a 2 percent price increase to product X, the most successful product in the firm.
a. Are products X and Y substitutes or complements?
b. Do you think your colleague' suggestion will have the desired effect? How much will total revenue change if you follow your colleague's suggestion?
ASAP PLEASE ...ANSWER IN TEXT PLEASE
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