ECONOMICS
ELASTICITY OF DEMAND
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
A 10 percent decrease in the price of a Pepsi decreases the demand for a Coca-Cola by 50 percent. The cross elasticity of demand between a Pepsi and Coca-Cola is:
|
|
50
|
|
|
0.20
|
|
|
10
|
|
|
5
|
Explanation:
Detailed explanation-1: -The cross elasticity of demand equals the percentage change in the quantity of Coca Cola divided by the percentage change in the price of a Pepsi. Hence the cross elasticity of demand equals (50 percent)/(10 percent) = 5.0.
There is 1 question to complete.