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Sagot :
The cross-price elasticity of demand of desks with respect to chairs when the price of a chair changes in the $45 to $55 range is -0.43
What is cross-price elasticity of demand?
The cross-price elasticity of demand measure the degree in quantity demanded of a product with respect to change in price of a complementary good, in essence, the change in quantity of desk to change in price of chair in this case.
Cross-price price elasticity of demand=% change in qty of desk/% change in price of chair
% change in qty=(190-210)/210=-0.09523809523810
% change in price of desk=($55-$45)/$45=0.222222222222222
cross-price elasticity=-0.09523809523810/0.222222222222222
cross-price elasticity=-0.43
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Full question:
Bill's Office Furniture sells office chairs and desks. Bill's has changed the price per chair by $10 in each of four successive weeks. Figure below shows the four prices along with the corresponding sales of desks.
Price Per Chair Quantity of Desks Demanded
$45 210
$55 190
$65 150
$75 120
What is the cross-price elasticity of demand of desks with respect to chairs when the price of a chair changes in the $45 to $55 range?
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