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
Demerits of direct taxes a. Heavy direct taxation, especially when closely linked to current earnings, can act as a serious check to productivity by encouraging absenteeism

STAGFLATION The term stagflation is a recent arrival in economic literature derived from joining together the stage of stagnation and flections of inflation. The term has been

critically analyze the firm''s theory of profit maxmization

INSTRUMENTS OF CREDIT CONTROL The central bank employs several instruments to control aggregate credit in the country. While some instruments like the open market operations mi

Lender of Last Resort The central bank also acts as the lender of last resort. Historically, this function developed out of the special position of the central banks. The centr

Schumpeter Description According to Schumpeter, a cycle represents wave like deviations in business activity from the equilibrium or trend line. There are equilibrium points an

explain the supply function and importance of supply analysis in brief

Elasticity of Demand As the law of demand establishes a relationship between quantity demanded and price for a product, it doesn't tell us exactly as how weak or strong the rel

define scarcity and oppurtunity cost.show how these concepts are useful in managerial decision making

Q. Optimal Input Combination for Maximisation of Output? Equilibrium conditions of the firm are identical to the above situation which is, iso-cost line must be tangent to the