Explore BrainMass
Share

Interpreting Elasticity Coefficients of Demand

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

6. You have the following information for your product
a. The price elasticity of demand is -0.9
b. the income elasticity of demand is 0.5
c. the cross-price elasticity of demand between your good and a related good is 2.0

What can you determine about consumer demand for your product from this information?

© BrainMass Inc. brainmass.com March 22, 2019, 2:41 am ad1c9bdddf
https://brainmass.com/economics/elasticity/interpreting-elasticity-coefficients-demand-585585

Solution Preview

The price elasticity of demand is -0.9. Negative sign indicates that price and quantity demanded have inverse relationship (Keeping the other factors unchanged). If the price of product increases by 1%, quantity demanded will decrease by ...

Solution Summary

Solution predicts the behavior of demand with the help of information provided.

$2.19