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Economics

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If a firm supplies separable markets with price elasticities h1 = -3 and h2 = -2, it should set prices P1 and P2 so that:


a.2/3P1 = 1/2P2
b.3P1 = 2P2
c.2P1 = 3P2
d.P1 = P2
e.2P1 = 2/3P2

  • Economics -

    For your professor's, you gotta use the table , ululasy found at the back of your textbook or chapter, in the appendix, etc. I don't recommend using the table because it only works under certain uniform situations. The table's answer will also not be the exact correct answer; and the error will be bigger in bigger problems. Cheers.

  • Economics -

    2/3P1 = 1/2P2

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