1. Suppose the own price elasticity of demand for good X is -2, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is -6. Determine how much the consumption of this good will change if:
a. The price of good X increases by 5 percent.
b. The price of good Y increases by 10 percent.
c. Advertising decreases by 2 percent.
d. Income falls by 3 percent.
2. You are division manager at Toyota. If your marketing department estimates that the semiannual demand for the Highlander is Q = 100,000 - 1.25P, what price should you charge in order to maximizes revenues from sales of the Highlander?