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What percentage will demand for dunkin donuts glazed donuts

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Reference no: EM132540688

You are the manager for Dunkin Donuts and know the following elasticities:

n=1.5 n1= 1.2 nxy1= 0.5 nxy2= -0.5

N is the price elasticity of demand for Dunkin Donuts (DD) glazed doughnuts. Nxy1 is the cross elasticity of demand between DD glazed and Krispy Kreme (KK) glazed doughnuts. Nxy2 is the cross elasiticy of demand between DD glazed doughnuts and DD French Vanilla coffee, and n1 is the income elasticity of DD glazed doughnuts.

Question 1: Krispy Kreme lowers its price of glazed donuts by 20%. The demand for Dunkin Donuts glazed donuts will change by what percentage and in what direction?

Reference no: EM132540688

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