Question
Your firm is conducting a pricing experiment around the store and you have data on two products, A and B. From this pricing study you
Your firm is conducting a pricing experiment around the store and you have data on two products, A and B. From this pricing study you have collected the following information.
Week 1 | Week 2 | ||
Product A | Price Quantity Sold | $50 200 | $60 120 |
Product B | Price Quantity Sold | $40 100 | $40 90 |
Given this information, answer the following questions:
What is the own elasticity of Product A? Should the firm raise or lower their price to increase revenue?
What is the cross-price elasticity of Product As Price on Product Bs Quantity Sold? What does this suggest about the relationship between Products A and B?
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