Which of the following examples accurately shows the cross-price elasticity of demand?
a. A +3 percent price for rye bread and a +6 percent demand for oatmeal bread equals a cross-price elasticity of demand of +18.
b. A +9 percent price for roses and a +11 percent demand for tulips equals a cross-price elasticity of demand of +2.
c. A +7 percent price for bar soap and a +21 percent demand for liquid soap equals a cross-price elasticity of demand of +28.
d. A +10 percent price for chocolate chip cookies and a +30 percent demand for oatmeal raisin cookies equals a cross-price elasticity of demand of +3.
d. A +10 percent price for chocolate chip cookies and a +30 percent demand for oatmeal raisin cookies equals a cross-price elasticity of demand of +3.
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If the nominal interest rate is greater than the real interest rate in an economy:
A) the real interest rate must be negative. B) inflation must be positive in the economy. C) inflation must be zero in the economy. D) inflation must be negative in the economy.
If the price of gasoline has increased from $2 per gallon to $4 per gallon at the same time that the overall price index increased from 200 to 450, then you know that the inflation adjusted price of gasoline has
A. decreased. B. remained constant. C. increased.