The cross-price elasticity of coffee and tea is 0.63, where the pecentage change

Question

The cross-price elasticity of coffee and tea is 0.63, where the pecentage change in quantity is for coffee and the percentage change in price is measured for tea. Calculate the percentage that the quantity demanded of coffee will change if the price of tea increases by 3.0%. Enter your response to one decimal place, and enter a negative number if the quantity demanded decreases. Number Tools The cro x 102 and the prmyhange in price is measured for violins. Calculate the percentage that the quantit demanded of bows will change if the price of violins decreases by 13%. Enter your response to one decimal place, and enter a negative number if the quantity demanded decreases. city of bows and violins is-0.36, where the percentage change in quantity is for bows Number

Explanation / Answer

Cross-price elasticity of coffee and tea = 0.63.

Percentage change in the price of tea = 3.0% or 0.03.

Percentage change in the quantity demanded of coffee:

0.63 = % change in quantity demanded of coffee / 0.03.

Percentage change in the quantity demanded of coffee = 0.63 x 0.03 = 0.0189 or 1.89%

+1.9%

Cross-price elasticity of bows and violins = -0.36.

Percentage change in the price of violins = -13% or -0.13 (Decrease in price)

Percentage change in the quantity demanded of bows:

-0.36 = % change in the quantity of bows / -0.13

Percentage change in the price of bows = -0.36 x -0.13 = +0.0468 or + 4.68%

+4.7%.

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