Question

How can I get the answer -1.25?

Month QY Рx Ох PY $20 PZ $25 Qz 200 Jan 50 $10 100 Feb 90 25 225 10 18 60 Mar 70 275 10 15 90 25 25 290 Аpr May 12 50 15 100 15 25 320 25 15 120 Use the data from January and February. In the above table, the cross price elasticity of demand for good Z with good Y when PY falls from $20 (old price) to $18 (new price) is __ Hint: You'll have to see what the quantities of Z are at these two prices of Y. Do the percent changes, and find the cross-price elasticity. Remember that cross-price elasticity can be positive or negative! The cross-price elasticity is

Answer 1

Py = $20 Q2 = 200 př=$18 , QZ = 225 Gross price elasticity of demand for Coods with - Good į with Percentage change in Quantity demanded of good 2 Percentage change in Price of good y good Y

Imid point Formella) Croes price elashüity of dd for good with good Y = Q - Q2 - Pypy Qž + Q R 225-200 18 - 20 2257200 18+20 2 x 38 V -1021 425 -1.25 TOR) Percentage change in Quantity of 2 225 - 200 = .125 Qz! 200 Percentage change in Price of y 2 Py = y 18-20 - -0. Cross price elasticity = .125 . lees s from above for mulla) 2-1.25