00:01
Hello, let's start with part a.
00:08
So for each part, we need to find the value of consumption or quantity demanded.
00:16
So quantity demanded.
00:23
Yeah, we need to find the change in quantity demand, sorry.
00:26
We need to find the change in quantity demanded.
00:29
Percentage change.
00:32
So the percentage change in quantity demanded, in the first case, we know that the price of good x, increases by 5%.
00:43
So here we have an increase by 5%, plus 5%, and we multiply this by the own price elasticity of demand for this good, which is negative 2.
01:04
And if we multiply, we will see that consumption will decrease its minus, decrease by 10%.
01:17
So decrease by 10 % is a change in the consumption in this case.
01:24
Okay, now the part b, again we calculate the change in the consumption of good.
01:32
X, it's given that the price of good y increases by 10%.
01:37
So there is 10 % increase in the price of good y.
01:44
And now we use the cross price elasticity of the amount of for good x and good y and it's negative 6.
01:58
So the price of good y increases by 10%.
02:01
We multiply this by minus 6 and we have the decrease in the consumption of good x by 60%.
02:11
10 times 6 is 60, negative 60 % is a change in the increase...