Business, 26.07.2019 00:30, loyaltyandgood

According to hong and wolak (2008), a 5% postal price increase, such as the one in 2006, reduces postal revenue by $198 million and lowers consumer surplus by $333 million. hong and wolak estimate that the elasticity of demand is minus1.6. assume that there is a constant elasticity of demand function, qequalsxp superscript negative 1.6, where x is a constant and q is the quantity of first-class stamps (in millions). in 2006, the price of a first-class stamp went from $0.37 to $0.39. given the information in the problem about the effect of the price increase on revenue, calculate x. the value for x is

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According to hong and wolak (2008), a 5% postal price increase, such as the one in 2006, reduces pos...