A tax that would effectively increase the price of electricity (produced by hydroelectric facilities) by $4. To assist you in your decision, an economist in your office has estimated the demand for residential heating fuel using a linear demand specification. The regression results are presented as follows. Based on this information, which proposal would you favor? Explain.
January 4, 2018
what is contract law to common non employment workplace scenarios?
January 4, 2018

f the own price elasticity of demand for paper books is -2, how will a 4 percent decrease in the price of paper books affect your overall revenues from both paper book and ebook sales?

You are a manager in charge of monitoring cash flow at a major publisher. Paper books comprise 40 percent of your revenues, which grow about 2 percent annually. You recently received a preliminary report that suggests the growth rate in ebook reading has leveled off and that the cross-price elasticity of demand between paper books and ebooks is -0.3. In 2016, your company earned about $600 million from sales of ebooks and about $400 million from sales of paper books. If the own price elasticity of demand for paper books is -2, how will a 4 percent decrease in the price of paper books affect your overall revenues from both paper book and ebook sales?

 

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