What is cross price easticity of demand, Managerial Economics

For some time, two firms have charged $0.90 per standard unit of crating materials for shipping a particular type of machine tool and each has been selling about 20,000 units per month. Last month, U-Pak-It reduced its price to $0.80 per unit and its volume increased to 25,000 units. During that month, Boxit (the other company) maintained its price at $0.90 but saw its volume decline to 17,000 units.

a. What is the price elasticity of demand facing U-Pak-It?

b. What is Boxit's cross-price elasticity of demand for U-Pak-It price changes?

c. If the price elasticity of demand for Boxit is the same as that for U-Pak-It, what price reduction for Boxit would be required to increase its monthly volume back to 20,000 units per month?

Posted Date: 4/1/2013 5:46:07 AM | Location : United States







Related Discussions:- What is cross price easticity of demand, Assignment Help, Ask Question on What is cross price easticity of demand, Get Answer, Expert's Help, What is cross price easticity of demand Discussions

Write discussion on What is cross price easticity of demand
Your posts are moderated
Related Questions
Given a saving function of S = -25 + .2Yd, a $10 billion enhance in government spending will bring about how many dollars of change in consumption?

Disadvantages of a Free Economy The free market gives rise to certain inefficiencies called market failures i.e. where the market system fails to provide an optimal allocation

INTERNATIONAL FINANCIAL INSTITUTIONS In July 1944, a conference took place at Bretton Woods in New Hampshire to try to establish the pattern of post-war international monetary

Strategic Reasons For political or strategic reasons, a country may not wish to be dependent upon imports and so may protect a home industry even if it is inefficient.  Many co

Q. Central characteristics of Simon satisfying behaviour model? The pattern of policy commitments which result from the bargaining process can be seen to be a specification of

You own a pharmaceutical company that is specialized in the manufacture of medicine for smokers. You newly patented an innovative drug called Clealung, which drastically reduces th

critically analyze the firm''s theory of profit maxmization


State the difficulties in the measurement of profit.

A complementary facility for commodity-related shortfalls in export earnings This is the most recent proposal of the Group of 77 at UNCTAD in June 1979.  There they requested