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  3. you own goods a and b. you are considering increas

You own goods A and B. You are considering increasing price of good A by 10%....

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Economics

You own goods A and B. You are considering increasing price ofgood A by 10%. Here is the information you have Pa = 20 Qa = 1000For each $1 increase in Pa, Qa will decrease by 100. Pb = 12 Qb =750 For each $1 increase in Pa, Qb will increase by 100. (The pointof this exercise is to have you do everything the long way then usethe delta r formula so you can see the difference) a . What isTotal revenue of A before the price change? b. What is totalrevenue of A after the price change? c . What is Total revenue of Bbefore the price change? d. What is total revenue of B after theprice change? e. What is the change of revenue for A after theprice changes? f. What is the change or revenue for B after theprice changes? g. What is change in total revenue for both goodsafter price changes? h. What is the own price elasticity for goodA? i. What is the cross price elasticity of A and B? j. Calculatethe change of revenue using the formula provided in class. k.Explain why the two methods have different answers. l. To calculatethe change in total revenue from the price change, which method doyou prefer? Doing parts a-g or doing part h-j? Briefly explain.

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For each 1 increase in Pa Qa will decrease by 100 For each 1increase in Pa Qb will increase by 100you are considering    See Answer
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