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
Advantages of a Free Market System Incentive:   People are encouraged to work hard because opportunities exist for individuals to accumulate high levels of wealth. Choice

The optimum output and price level is always determined with the concepts of revenue and costs-the difference in joint or independent production will show in the differences in cos

Explaination of the Marris Model

Jeremy is an economics learner who loves hamburgers. He could eat any number of them for dinner, but he gets a really bad stomach ache after eating a certain amount. In fact, his u

Function of Money Markets The money markets are the place where money is "wholesaled".  As such the supply of money and interest rate which are of significance to the whole ec

Features of Planned Economy The command economies relies exclusively on the state.  The government will decide what is made, how it is made, how much is made and how distribut

PROGRESSIVE TAX A progressive income tax system is one where the higher the income, the greater the proportion paid in taxes.  This is effected by dividing the taxpayers' inco

ARGUMENTS FOR MONOPOLIES Although monopolies are usually hated mainly because their practice of consumer exploitation, there are some aspects of monopolies which are favourabl

explian williomson model of managerial discretion

Q. Explain about Time series analysis? An analysis of relationship between variables over a period of time. Time-series analysis is helpful in assessing how an economic or othe