question archive We assume that there are two goods that compete with each other, whose demand X1 and 2, depend on their own price as well as on the price of the other good: 31 = x1(P1, P2) x2 = x2(P1, p2) For this situation, different price elasticities can be formulated, the so-called own-price elasticities of demand ?x1(P1, P2) P1 ?x2(P1, P2) P2 Ex1,p(P1, P2) and Ex2,p (P1, P2) 21 ap2 as well as the cross-price elasticities of demand ??? 22 Ex1,2 (P1, P2) = 0x 1 (P1, P2) P2 ??2 and €72
We assume that there are two goods that compete with each other, whose demand X1 and 2, depend on their own price as well as on the price of the other good: 31 = x1(P1, P2) x2 = x2(P1, p2) For this situation, different price elasticities can be formulated, the so-called own-price elasticities of demand ?x1(P1, P2) P1 ?x2(P1, P2) P2 Ex1,p(P1, P2) and Ex2,p (P1, P2) 21 ap2 as well as the cross-price elasticities of demand ??? 22 Ex1,2 (P1, P2) = 0x 1 (P1, P2) P2 ??2 and €72
Subject:AccountingPrice: Bought3
We assume that there are two goods that compete with each other, whose demand X1 and 2, depend on their own price as well as on the price of the other good: 31 = x1(P1, P2) x2 = x2(P1, p2) For this situation, different price elasticities can be formulated, the so-called own-price elasticities of demand ?x1(P1, P2) P1 ?x2(P1, P2) P2 Ex1,p(P1, P2) and Ex2,p (P1, P2) 21 ap2 as well as the cross-price elasticities of demand ??? 22 Ex1,2 (P1, P2) = 0x 1 (P1, P2) P2 ??2 and €72.pl (P1, p2) 0x2(p1, p2) p1 ??? 22 21 (a) For the demand functions *1 = 8p, "P2 -3/2 1/2 and 1/ 2-1/2 22 = 3p1P2 = determine the respective own-price elasticities and the two cross-price elasticities, determine the respective own-price elasticities and the two cross-pric (b) How do the demands 21 and 22 change (approximately) if i. the price p? increases by 1%? ii. the price p2 decreases by 2 %?
