Question

A 10 percent increase in the price of soda leads to a 20 percent increase in...

A 10 percent increase in the price of soda leads to a 20 percent increase in the quantity of iced tea demanded. It appears that:

a) elasticity of demand for soda 0.5 and is inelastic.

b) elasticity of demand for iced tea is 2 and is elastic.

c) cross-price elasticity of demand for soda is -0.5.

d) cross-price elasticity of demand for iced tea is 2.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Option D

  • Cross price elasticity of demand refers to the responsiveness of a good's demand with respect to the changes in the price of another good and It is calculated as the percentage in quality of a good divided by percentage in price of another good.
  • Here it is said that the quantity of iced tea demanded = 20% and the price of soda = 10%.
  • The price elasticity of demand is given by,

PED = % Q / % P

= 20 / 10

= 2.//

Therfore, the cross price elasticity of demand for iced tea is 2.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
5. Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3...
5. Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3 pizzas per month when the price is $15. What is the price elasticity of Bobo’s demand curve? Multiple Choice a.0.235 b.2.00 c.4.25 d.6.33 6. Suppose that Mimi plays golf 5 times per month when the price is $40 and 4 times per month when the price is $50. What is the price elasticity of Mimi’s demand curve? Multiple Choice a.0.1 b.0.8 c.10.0 d.1.0 7....
8. When the price increases by 30 percent and the quantity demanded drops by 30 percent,...
8. When the price increases by 30 percent and the quantity demanded drops by 30 percent, the price elasticity of demand is unitary elastic. elastic. perfectly inelastic. inelastic. perfectly inelastic. 9. If the cross-price elasticity of demand between Good A and Good B is 2 and the percentage change in price of Good A is 5 percent, what is the percentage change in quantity demanded of Good B? -3 percent 1.50 percent 10 percent 3 percent -1.25 percent
In Market A, a 4 percent increase in price reduces the quantity demanded by 2 percent....
In Market A, a 4 percent increase in price reduces the quantity demanded by 2 percent. In Market B, a 3 percent increase in price reduces the quantity demanded by 4 percent. The demand in Market A and Market B are considered______ and _______, respectively. a) unit price-elastic; perfectly price-inelastic. b) price-elastic; price-inelastic. c) perfectly price-elastic; unit price-elastic. d) price-inelastic; price-elastic.
Q1: If a 10 percent rise in the price of coffee increases the quantity of tea...
Q1: If a 10 percent rise in the price of coffee increases the quantity of tea demanded by 25 percent and decreases the quantity of coffee demanded by 20 percent, Calculate price elasticity of coffee Q2: Calculate the cross-elasticity of demand between coffee and tea.
A price change causes the quantity demanded for a good to increase by 20 percent and...
A price change causes the quantity demanded for a good to increase by 20 percent and the total revenue of that good decreases by 15 percent. What can you say about the price elasticity of demand at this point. It's elastic It's inelastic It's unitary elastic It's perfectly elastic
Hello, Is it possible to get additional assistance on these questions? This is a remedial class...
Hello, Is it possible to get additional assistance on these questions? This is a remedial class I am taking and my classmates/professor havent been the greatest support. 1. Calculate the price elasticity of demand where a 10 percent change in price leads to a 5 percent change in quantity demanded. Is Ed elastic or inelastic? 2. Calculate the price elasticity of demand where a 7 percent change in price leads to a 21 percent change in quantity demanded. Is Ed...
If a 5 percent reduction in the price of coffee leads quantity demanded for coffee to...
If a 5 percent reduction in the price of coffee leads quantity demanded for coffee to increase by 10 percent, demand is: A.Elastic B.Perfectly elastic c.inelastic D.unit elastic
A price change causes the quantity demanded of a good to increase by 20 percent, while...
A price change causes the quantity demanded of a good to increase by 20 percent, while the total revenue of that good increases by 15 percent. Is the demand curve elastic or inelastic? Explain.
(60)A perfectly inelastic demand curve has an elasticity coefficient of: (a)1 (b)0.25 (c)∞ (d)None of the...
(60)A perfectly inelastic demand curve has an elasticity coefficient of: (a)1 (b)0.25 (c)∞ (d)None of the above Akal mn wahed Extra Credit Questions-Optional (61)If the percentage change in the quantity supplied of a good is less than the percentage change in price, price elasticity of supply is: (a)Inelastic (b)Perfectly inelastic (c)Elastic (d)Unitary elastic (62)If the percentage change in the quantity demanded of a good is equal to the percentage change in price, price elasticity of demand is: (a)Inelastic (b)Perfectly inelastic...
When the price of good "X" increases 20 percent (+20%), Harry decreases his quantity demanded of...
When the price of good "X" increases 20 percent (+20%), Harry decreases his quantity demanded of "X" by 25 percent while Meghan decreases her quantity demanded of "X" by 15 percent. Harry's demand for good "X" is (relatively inelastic / unitary elastic / relatively elastic) and Meghan's demand for good "X" is (relatively inelastic / unitary elastic / relatively elastic). A.  Relatively inelastic; relatively inelastic. B.  Relatively inelastic; relatively elastic. C.  Unitary elastic; relatively elastic. D.  Relatively elastic; relatively elastic.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT