Use the table below to answer the following questions.
Table 4.2.2

-Refer to Table 4.2.2. The cross elasticity of demand for Jolt with respect to the price of Coke is
A)0.75.
B)1.5.
C)0.40.
D)10.
E)It cannot be calculated because income is not constant.

Question

Use the table below to answer the following questions.
Table 4.2.2
 
-Refer to Table 4.2.2. The cross elasticity of demand for Jolt with respect to the price of Coke is
A)0.75. 
B)1.5. 
C)0.40. 
D)10. 
E)It cannot be calculated because income is not constant.

Quizplus · Accepted Answer

The cross elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good. A value of 1.5 indicates that a 1% increase in the price of Coke leads to a 1.5% increase in the quantity demanded of Jolt, suggesting they are substitute goods.

Use the Table Below to Answer the Following Questions