Question

Mr. Simba opened a new burger cafe in downtown Bangkok. He would like to assess how a change in price of burgers would affect the quantity of burgers sold. His good friend recommends him to use the cross-price elasticity of demand concept to figure this issue out

(i) Do you think his friend gave him the correct recommendation? If not, why? Explain in

detail.

(ii) If Mr. Simba sells two goods, burgers and fries, what type of price elasticity he has to

concern?

Answer 1