When lettuce prices doubled, from about $1.70 per head to about $3.40 the reaction of one consumer was quoted in a newspaper article: "I will not buy [lettuce] when it's $3.40 a head," she said, adding that other green vegetables can fill in for lettuce. "If bread were $5 a loaf we'd still have to buy it. But lettuce is not that important in our family."
Justin Bachman, "Sorry, Romaine Only," Associated Press, March 29, 2002.
For this consumer's household, which product has the higher price elasticity of demand: bread or lettuce?
Is the cross-price elasticity of demand between lettuce and other green vegetables positive or negative for this consumer: negative or positive?
Bread has a higher price elasticity of demand because the consumer said if bead were $5 a load they still have to buy it meaning the break is a necessary good for them and has high price elasticity.
Cross price elasticity of demand is a measure of the responsiveness of quantity demanded of one good to a change in the price of other
The consumer said that he will just replace lettuce with other green vegetables which means lettuce and other green vegetables are complementary goods, one can replace the other. and cross-price elasticity for complementary goods is negative
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