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Table 5.1       Price Elasticity and Cross Price Elasticity of Demand for Oranges ________________________________________________________________             &nbs

Table 5.1       Price Elasticity and Cross Price Elasticity of Demand for Oranges

________________________________________________________________

                                 Florida                     

Type of Orange                 Indian River          Florida Interior          California

Florida Indian River             -3.07                        +1.56                     +0.01

Florida Interior                      +1.16                       -3.01                     +0.14

California                              +10.18                     +0.09                      -2.76

From table 5.1 above, determine:

By how much the demand for Florida Indian River oranges would change as a result of a 10% increase in the price of Florida interior oranges.

By how much the demand for Florida interior oranges would change as a result of a 10% increase in the price of Florida Indian River oranges.

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Answer #1

CPE (Florida Indian river oranges to Florida interior oranges) = 1.56 = percent change in quantity demanded (Florida Indian river oranges)/ percent change in price (Florida interior oranges)

Demand for Florida Indian river oranges would change by = 1.56 x 10% = 15.6%

CPE (Florida interior oranges to Florida Indian river oranges) = 1.16 = percent change in quantity demanded (Florida interior oranges)/ percent change in price (Florida Indian river oranges)

Demand for Florida interior oranges would change by = 1.16 x 10% = 11.6%

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