Question
You are the manager of a firm that receives revenues of $40,000 per year from product X and $90,000 per year from product Y. The own price elasticity of demand for product X is -1.5, and the cross-price elasticity of demand between product Y and X is -1.8.
How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 2 percent?
How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 2 percent?