Answer to Question #70633 in Microeconomics for nouga

Question

Cross-price elasticity refers to?
The formula for cross-price elasticity is?
Suppose computer prices at an office supply store fall from $1,000 to $900 and as
a result the quantity demanded of typewriters decreases from 40 to 20 per month.
The cross-price elasticity of demand is closest to?
Assume apples and oranges are substitutes. Suppose apple growers launch a
successful advertising campaign that convinces consumers apples are a better
product. As a result the cross-price elasticity of apples and oranges will become?
Suppose the price of video games falls from $40 to $20 and as a result the
quantity demanded of scooters falls from 40,000 to 10,000 per year. The value of
the cross-price elasticity of demand is?
i need answers with explanations

Answer 1

a) Cross price elasticity of demand refers to the percentage change in the
quantity demanded of a given product due to the percentage change in
the price of another "related" product.
b) The formula for cross-price elasticity is E c = ((P A 1 +P A 2 )/(Q 1 B +Q 2 B ))*((Q 2 B -Q 1 B )/ /(P A 2 -
P A 1 )).
c) E c = (($1000+$900)/(40+20))*((20-40)/($900- $1000))= 6,33
d) With a well-run advertising company, the sales of apples have skyrocketed, and
the number of oranges sold will decrease, so cross-elasticity will decrease.
e) E c = (($40+$20)/(40000+10000))*((10000-40000)/($20- $40)) = 1,8.