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Computers are sold competitively. Each computer, such as a Dell or Compaq, contains an operating system, such as Windows, that is pre-loaded on the computer. Suppose that the price of computers is $2000, and the price of an operating system is $100. If the elasticity of demand for computers is -2.0, and any price increase for the OS is "passed through" to consumers in the price of the computer, then the elasticity of demand for the operating system is approximately -0.1.

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9477234

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