Table 5.1 Price Elasticity and Cross Price Elasticity of Demand for Oranges ____
ID: 1150249 • Letter: T
Question
Table 5.1 Price Elasticity and Cross Price Elasticity of Demand for Oranges
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Florida
Type of Orange Indian River Florida Interior California
Florida Indian River -3.07 +1.56 +0.01
Florida Interior +1.16 -3.01 +0.14
California +10.18 +0.09 -2.76
From table 5.1 above, determine:
By how much the demand for Florida Indian River oranges would change as a result of a 10% increase in the price of Florida interior oranges.
By how much the demand for Florida interior oranges would change as a result of a 10% increase in the price of Florida Indian River oranges.
Explanation / Answer
CPE (Florida Indian river oranges to Florida interior oranges) = 1.56 = percent change in quantity demanded (Florida Indian river oranges)/ percent change in price (Florida interior oranges)
Demand for Florida Indian river oranges would change by = 1.56 x 10% = 15.6%
CPE (Florida interior oranges to Florida Indian river oranges) = 1.16 = percent change in quantity demanded (Florida interior oranges)/ percent change in price (Florida Indian river oranges)
Demand for Florida interior oranges would change by = 1.16 x 10% = 11.6%
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