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Sagot :
Answer:
To calculate the change in overall revenues from both paper
books and ebooks sales due to a 1 percent decrease in the
price of paper books, we need to follow these steps:
1. Calculate the new price of paper books after a 1 percent
decrease:
Let the original price of paper books be denoted by P.
After a 1 percent decrease, the new price (P') will be:
P= P– 0.01P= 0.99P
2. Calculate the percentage change in quantity demanded of
paper books:
Given that the ovwn price elasticity of demand for paper books is
-2.5, we use the formula:
Eạ =
%AQa
%AP
Given that Eạ = -2.5, and we want to find the percentage
change in quantity demanded when the price decreases by 1
percent, we substitute the values:
-2.5 – %AQa
-1
3. Calculate the percentage change in quantity demanded of
ebooks:
Using the cross-price elasticity of demand between paper
books and ebooks (-0.2), we can calculate the percentage
change in quantity demanded of ebooks when the price of
paper books decreases by 1 percent:
%AQebooks = Cross-price elasticity x %AP = -0.2 x -1 = 0.2%
4. Calculate the change in revenues for both paper books and
ebooks:
The change in revenue for paper books will be:
Change in revenue from paper books = %AQax%APxOriginal revenı
Change in revenue from ebooks = %AQebooks X %AP x Revenue fromn
5. Add the changes in revenues from paper books and ebooks
to find the overall change in revenues.
This step-by-step process should help you accurately
determine how a 1 percent decrease in the price of paper books
will affect your overall revenues from both paper books and
ebooks sales.
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