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4. If a 12% increase in the price of grapefruit juice causes a 22% decrease in...


4. If a 12% increase in the price of grapefruit juice causes a 22% decrease in the quantity of grapefruit juice demanded. On the other hand, there is a 14% increase in the quantity demanded for Ron Don Q; Calculate: a) the price elasticity of demand for grapefruit juice and rum. b) Calculate the cross elasticity of demand between grapefruit juice and Don Q Rum.

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Answer #1

A) for finding the price elasticity of demand we have to use the equation ∆q÷∆p so,we have to find the price elasticity

B) for finding the cross elasticity of demand we have to divide the change in price of one product by the change in quantity demand of the other one

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