Suppose the elasticity of demand for mustard with respect to the price of hot dogs is...
Suppose the elasticity of demand for mustard with respect to the price of hot dogs is −0.5. This means that a 10 percent rise in the price of hot dogs will cause the quantity of mustard demanded to:
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Increase by 5% |
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Increase by 20% |
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Decrease by 5% |
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Decrease by 20% |
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Increase by 15% |
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Decrease by 15% |
Homework Answers
Answer
option 3
decrease by 5%
Cross price elasticity of demand =%change in quantity of a good
/%change in the price of other good
-0.5=%change in quantity of hot dog /10
%change in quantity of hot dog =-5%
the minus sign shows decreased.
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