The London Times, owned by Rupert Murdoch is one of the world’s leading newspapers. In September of.

The London Times, owned by Rupert Murdoch is one of the world’s leading newspapers. In September of 1993, the Times lowered its price from 45 pence to 30 pence, while the prices of its rivals remained unchanged. The numbers of newpapers sold by the Times and its rivals in August 1993 and May 1994 were as follows: Agust 1993 May 1994 London Times 355,000 518,000 Daily Telegraph 1,024,000 993,000 Independent 325,000 277,000 Guardian 392,000 402,000 a. Based on thse figures, what was the price elasticity of demand for the London Times? (Use the Art elasticity formula) b. Without doing any

The London Times, owned by Rupert Murdoch is one of the world’s leading newspapers. In September of 1993, the Times lowered its price from 45 pence to 30 pence, while the prices of its rivals remained unchanged. The numbers of newpapers sold by the Times and its rivals in August 1993 and May 1994 were as follows: Agust 1993 May 1994 London Times 355,000 518,000 Daily Telegraph 1,024,000 993,000 Independent 325,000 277,000 Guardian 392,000 402,000 a. Based on thse figures, what was the price elasticity of demand for the London Times? (Use the Art elasticity formula) b. Without doing any additional math, did the decrease in price increase or decrease the total revenue from newpaper to the Times? c. On the basis of newspaper sales alone, was the price decrease profitable? d. Calculate the arc cross-price elasticity of demand between the Independent and the price of the London Times. Based on the calculated value, what would be the impact on the Independent if the Times lowered it price by another 5 percent? e. Sales of the Guardian increased. Does this make sense? Might this result make you wary about your answers to A and D? Why?

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