Question

​If, in​ equilibrium, the​ cross-price elasticity between airline tickets and gasoline is 2.2​; when the price of the gasoline increases by 4​%, the quantity demanded of airline tickets increases by nothing​% ​(enter your response rounded to two decimal places​).

Answer 1

Answer:

8.8%

Step-by-step explanation:

Given that,

Cross-price elasticity between airline tickets and gasoline = 2.2

Price of the gasoline increases by 4​%.

Therefore,

Cross-price elasticity  = Percentage change in the quantity demanded of airline tickets ÷ Percentage change in the price of gasoline

2.2 = Percentage change in the quantity demanded of airline tickets ÷ 4%

2.2 × 4 = Percentage change in the quantity demanded of airline tickets

8.8% = Percentage change in the quantity demanded of airline tickets