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Margarita [4]
2 years ago
14

Suppose the cross-price elasticity of demand between goods X and Y is 4. How much would the price of good Y have to change in or

der to increase the consumption of good X by 20 percent?
Business
1 answer:
boyakko [2]2 years ago
3 0

Answer:

Increase by 5%.

Explanation:

Given that,

cross-price elasticity of demand between goods X and Y = 4

Percentage increase in consumption of good X = 20 %

cross-price elasticity of demand = Percentage change in quantity demanded for good X ÷ Percentage change in price of good Y

4 = 20 ÷ Percentage change in price of good Y

Percentage change in price of good Y = 20 ÷ 4

                                                                = 5%

Therefore, the price of good Y must be increase by 5% in order to increase the consumption of good X by 20 percent.

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<h3>Cynthia and Dove Corporation</h3>

Any profits generated by Dove Corporation will be taxed to the corporation and also taxed to Cynthia as a shareholder whenever Dove distributes the profits as dividends. Taxing Dove and Cynthia creates a double taxation burden for both Dove and Cynthia. Dove Corporation does not get a tax deduction when it distributes dividends to Cynthia.  Furthermore, Cynthia cannot deduct any corporation loss when incurred.  These are unlike when the business was only a sole proprietorship.

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Assets

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Cash                                                 $ 80,000              $ 80,000

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Notes payable—bank                    360,000

Stockholders' equity:

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Total                                          $1,200,000

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