Use the Following Scenario

question 13

Multiple Choice

use the following scenario.You are a consultant and have been employed by Urban General, a large inner-city hospital, to estimate the demand for its services.Your research indicates that the income elasticity of demand for the target market is +0.50; the price elasticity of demand is -0.15; and the cross-price elasticity of demand with respect to the price of services at St.Elsewhere, a near-by hospital, is +0.35.Answer the following questions.
-What is the cumulative effect of a simultaneous increase in area income of 5 percent and a 10 percent increase in prices at Urban General?

• A)Quantity demanded at Urban General falls by 4 percent.
• B)Quantity demanded at Urban General rises by 4 percent.
• C)Quantity demanded at Urban General rises by 1 percent.
• D)Quantity demanded at Urban General falls by 1 percent.
• E)Quantity demanded at Urban General does not change.

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