What happens to the demand for Brand A Ice Cream if consumer income falls by 4%?

Suppose the demand for Brand A Ice Cream is characterized by the following point elasticities: own p Show more Suppose the demand for Brand A Ice Cream is characterized by the following point elasticities: own price elasticity = -0.8 cross-price elasticity with Brand B Ice Cream = +2 income elasticity = +3 Based on the given elasticities answer the following. Explain your answers. a. If a firm in the industry wishes to increase total sales revenue (ignoring cost considerations) will it raise or lower its selling price? Why? b. What happens to the demand for Brand A Ice Cream if the price of Brand B Ice Cream rises by 10%? Explain your answer. c. What happens to the demand for Brand A Ice Cream if consumer income falls by 4%? Be specific. d. Is Brand A Ice Cream a normal or inferior good? Explain. Show less

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