This business/management problem is solved step by step below, with detailed explanations to help you understand the method and arrive at the correct answer.
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To calculate the elasticity of demand for product Y based on the change in price of product X, we use the cross-price elasticity of demand formula. The term "loss elasticity" is not standard, so we assume it refers to cross-price elasticity, which measures how the demand for one good changes in response to a price change in another good. We will use the arc elasticity (midpoint) formula for accuracy with discrete changes. The formula for cross-price elasticity of demand (E_XY) is: E_XY = Q_Y2 - Q_Y1(Q_Y2 + Q_Y1)/2P_X2 - P_X1(P_X2 + P_X1)/2 From the table: Initial Price of X (P_X1) = 140 Final Price of X (P_X2) = 150 Initial Demand for Y (Q_Y1) = 15,000 Final Demand for Y (Q_Y2) = 19,000 Step 1: Calculate the percentage change in the price of X. \% P_X = P_X2 - P_X1(P_X2 + P_X1)/2 = (150 - 140)/((150 + 140)/2) = (10)/(290/2) = (10)/(145) Step 2: Calculate the percentage change in the quantity demanded of Y. \% Q_Y = Q_Y2 - Q_Y1(Q_Y2 + Q_Y1)/2 = (19,000 - 15,000)/((19,000 + 15,000)/2) = (4,000)/(34,000/2) = (4,000)/(17,000) = (4)/(17) Step 3: Calculate the cross-price elasticity of demand. E_XY = (\% Q_Y)/(\% P_X) = (4)/(17)(10)/(145) E_XY = (4)/(17) × (145)/(10) = (4 × 145)/(17 × 10) = (580)/(170) E_XY = (58)/(17) E_XY ≈ 3.41176 The cross-price elasticity of demand for product Y is approximately 3.41. The positive value indicates that products X and Y are substitutes. The loss elasticity of demand of product Y is 3.41. Send me the next one 📸