Question

The quantity demanded of frozen strawberries decreased from 1,800 to 1,550 when the price of fresh strawberries decreased from $2.35 to $2.15. What is the cross-price elasticity of demand for the strawberries

Answer 1

Answer:

1.63

Explanation:

Cross price elasticity = percentage change in quantity demanded of frozen strawberries / percentage change in price of fresh strawberries

percentage change in quantity demanded of frozen strawberries  = 1550/ 1800 - 1 = -0.1389 = -13.89%

percentage change in price of fresh strawberries = 2.15 / 2.35 - 1= -0.0851 = -8.51%

-13.89% / -8.51% = 1.63