Homework answers / question archive / Firm A faces a price elasticity of demand of -2

Firm A faces a price elasticity of demand of -2

Economics

Share With

---

Firm A faces a price elasticity of demand of -2.5 and a cross-price elasticity of demand with Firm B's product of 0.75. If Firm B lowers its price by 10% and Firm A leaves its price unchanged, then the change in Firm A's quantity sold will be

Question 13 options:

 

a) 

a rise of 7.5%

 

b) 

a rise of 15%

 

c) 

a decline of 7.5%

 

d) 

a decline of 15%