You possess the following information about IPATH. The price elasticity of demand for IPATH is - 2.5;
Question:
You possess the following information about IPATH. The price elasticity of demand for IPATH is - 2.5;
The cross price elasticity of demand for IPATH with respect to Laptops is 0.50; the income elasticity for IPATH is 3.0. Evaluate the following questions based on the supplied information.
a. If the price of I PATH were increased by 4%, by what percentage would sales of IPATH change?
b. An increase in the price of IPATH would increase the demand for laptops by 2%
c. Suppose that the price of IPATH increases by 5%, at the same time the price of laptops falls by 3% and income elasticity increases by 2%. What combined effect of these changes is expected with respect to sales of IPATH.
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