Imagine winning a radio trivia contest and being given the choice of three packages. Each package has twoprizes. One package has a cellular phone and a beeper; one package has a cellular phone and a coupon forunlimited calls for a year; and one package has a cell phone and a compact disc player. Unfortunately, thelabels on the packages only give you the following information: the goods in Package A have a crosselasticity of 0.63, the goods in Package B have a cross elasticity of 0.00; and the goods in Package C have across elasticity of -0.84.
a. Which package will you choose if you want the cellular phone and the coupon for unlimited calls? Explain your answer
b. Which package will you choose if you want the cellular phone and the beeper? Explain your answer.

Question

Imagine winning a radio trivia contest and being given the choice of three packages. Each package has twoprizes. One package has a cellular phone and a beeper; one package has a cellular phone and a coupon forunlimited calls for a year; and one package has a cell phone and a compact disc player. Unfortunately, thelabels on the packages only give you the following information: the goods in Package A have a crosselasticity of 0.63, the goods in Package B have a cross elasticity of 0.00; and the goods in Package C have across elasticity of -0.84.
a. Which package will you choose if you want the cellular phone and the coupon for unlimited calls? Explain your answer
 b. Which package will you choose if you want the cellular phone and the beeper? Explain your answer.

Quizplus · Accepted Answer

The Answer of Imagine winning a radio trivia contest and being given the choice of three packages. Each package has twoprizes. One package has a cellular phone and a beeper; one package has a cellular phone and a coupon forunlimited calls for a year; and one package has a cell phone and a compact disc player. Unfortunately, thelabels on the packages only give you the following information: the goods in Package A have a crosselasticity of 0.63, the goods in Package B have a cross elasticity of 0.00; and the goods in Package C have across elasticity of -0.84.
a. Which package will you choose if you want the cellular phone and the coupon for unlimited calls? Explain your answer
 b. Which package will you choose if you want the cellular phone and the beeper? Explain your answer.

Imagine Winning a Radio Trivia Contest and Being Given the Choice