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Answer to Question #67323 in Microeconomics for Ashu
Question #67323
Do two budget lines intersect?
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Suppose that you are the managing director of a firm that supplies three goods: laptops, USB drives and external hard drives. The price elasticity of the demand for laptops is 2.0; for USB drives it is 1, 00; and for external hard drives it is 0, 53. The firm is experiencing serious cash flow problems and you have to increase total revenue as soon as possible. You are in a position to set the prices for these goods. What would be your pricing strategy for each product? Motivate your decisions.
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