A computer company is considering lowering the price of its laptop computer to promote sales. However, it worries that this will reduce desktop computer sales. It finds the cross product of demand to be 1.5. Are its concerns legitimate? Explain

Please provide the best answer for the statement.

Yes. A cross elasticity of demand of 1.5 indicates that there is a positive relationship between the sales of desktop computers and the change in price of laptop computers, implying that they are substitutes. This means that when the price of laptop computers falls, sales for desktop computers also fall as consumers switch over and buy laptop computers. Thus, the computer company will have to consider how much it’s willing to let desktop computer sales drop to increase sales of laptop computers, and if that would be profitable.

Economics

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An increase in the demand for labor will ________ wages and ________ employment

A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease

Economics

Suppose an individual has a fixed amount of wealth to allocate between consumption in two periods (C1 and C2). Any funds not spent in period 1 will earn interest (at the rate r), which will increase purchasing power in period 2 . Consider four possible reactions to an increase in r: I. C1 increases. II. C1 decreases. III. C2 increases. IV. C2 decreases. Which of these is consistent with the

hypothesis that both C1 and C2 are normal goods? a. I, II, III, and IV. b. I, II, and IV, but not III. c. I, III, and IV, but not II. d. II and III, but not I and IV. e. I, II and III, but not IV.

Economics