The cross-price elasticity between two products is estimated to be-0.5. If the price of the first product is increased by 8%, demand for the second product will a) increase by 16% b) decrease by 4% c) increase by 4% d) increase by 8%

The cross-price elasticity between two products is estimated to be-0.5. If the price of the first product is increased by 8%, demand for the second product will a) increase by 16% b) decrease by 4% c) increase by 4% d) increase by 8%

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 3SQP

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Question

The cross-price elasticity between two products is estimated to be -0.5. If the price of
the first product is increased by 8%, demand for the second product will
a) increase by 16%
b) decrease by 4%
c) increase by 4%
d) increase by 8%

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