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Sagot :
When the price of hamburgers increases by 10% the demand for burgers decreases and the demand for hot dogs increased by 5%.
What is the cross-price elasticity of demand?
- When the price of one of the items varies, the cross elasticity of demand analyzes the link between the two.
- It illustrates how the relative shift in demand for one good changes as the cost of the other increases or decreases.
- The cross elasticity of demand, also known as the cross-price elasticity of demand, in economics quantifies the relationship between the percentage change in the quantity of a commodity sought and the percentage change in the price of another good, ceteris paribus.
- The quantity of an item is actually reliant on both the price of "related" products as well as the good's own price (price elasticity of demand).
Solution -
Given - When the price of hamburgers increased by 10%, the number of hot dogs sold increased by 5%.
Therefore, when the price of hamburgers increases by 10% the demand for burgers decreases and the demand for hot dogs increased by 5%.
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