QuestionFind the cross-price elasticity of demand for strawberries when quantity drops from 1,800 to 1,550 as price falls from \$2.35 to \$2.15. Round to the nearest hundredth.

Studdy Solution

STEP 1

Assumptions1. The initial quantity demanded of frozen strawberries is1,800. The final quantity demanded of frozen strawberries is1,5503. The initial price of fresh strawberries is $.354. The final price of fresh strawberries is$ .155. We are asked to find the cross-price elasticity of demand for the strawberries

STEP 2

The formula for cross-price elasticity of demand is $_{xy} = \frac{(\Delta Q_x/Q_x)}{(\Delta_y/P_y)}$ where- $_{xy}$ is the cross-price elasticity of demand- $\Delta Q_x$ is the change in quantity demanded of good x (frozen strawberries) - $Q_x$ is the initial quantity demanded of good x (frozen strawberries) - $\Delta_y$ is the change in price of good y (fresh strawberries) - $_y$ is the initial price of good y (fresh strawberries)

STEP 3

First, calculate the change in quantity demanded of frozen strawberries.
$\Delta Q_x = Q_{x_{final}} - Q_{x_{initial}} =1,550 -1,800$

STEP 4

Calculate the change in quantity demanded of frozen strawberries.
$\Delta Q_x =1,550 -1,800 = -250$

STEP 5

Next, calculate the change in price of fresh strawberries.
$\Delta_y =_{y_{final}} -_{y_{initial}} = \$2.15 - \$2.35$

STEP 6

Calculate the change in price of fresh strawberries.
$\Delta_y = \$2.15 - \$2.35 = -\$0.20$

STEP 7

Now, plug in the values into the formula for cross-price elasticity of demand.
$_{xy} = \frac{(\Delta Q_x/Q_x)}{(\Delta_y/P_y)} = \frac{(-250/1,800)}{(-0.20/2.35)}$

STEP 8

Calculate the cross-price elasticity of demand.
$_{xy} = \frac{(-250/1,800)}{(-0.20/2.35)} =0.14$ The cross-price elasticity of demand for the strawberries is0.14.

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QuestionFind the cross-price elasticity of demand for strawberries when quantity drops from 1,800 to 1,550 as price falls from \$2.35 to \$2.15. Round to the nearest hundredth.

Studdy Solution

STEP 1

STEP 2

STEP 3

First, calculate the change in quantity demanded of frozen strawberries.
$\Delta Q_x = Q_{x_{final}} - Q_{x_{initial}} =1,550 -1,800$

STEP 4

Calculate the change in quantity demanded of frozen strawberries.
$\Delta Q_x =1,550 -1,800 = -250$

STEP 5

Next, calculate the change in price of fresh strawberries.
$\Delta_y =_{y_{final}} -_{y_{initial}} = \$2.15 - \$2.35$

STEP 6

Calculate the change in price of fresh strawberries.
$\Delta_y = \$2.15 - \$2.35 = -\$0.20$

STEP 7

Now, plug in the values into the formula for cross-price elasticity of demand.
$_{xy} = \frac{(\Delta Q_x/Q_x)}{(\Delta_y/P_y)} = \frac{(-250/1,800)}{(-0.20/2.35)}$

STEP 8

Calculate the cross-price elasticity of demand.
$_{xy} = \frac{(-250/1,800)}{(-0.20/2.35)} =0.14$ The cross-price elasticity of demand for the strawberries is0.14.

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QuestionFind the cross-price elasticity of demand for strawberries when quantity drops from 1,800 to 1,550 as price falls from \$2.35 to \$2.15. Round to the nearest hundredth.

Studdy Solution

STEP 1

STEP 2

STEP 3

First, calculate the change in quantity demanded of frozen strawberries.ΔQx=Qxfinal−Qxinitial=1,550−1,800\Delta Q_x = Q_{x_{final}} - Q_{x_{initial}} =1,550 -1,800ΔQx​=Qxfinal​​−Qxinitial​​=1,550−1,800

STEP 4

Calculate the change in quantity demanded of frozen strawberries.ΔQx=1,550−1,800=−250\Delta Q_x =1,550 -1,800 = -250ΔQx​=1,550−1,800=−250

STEP 5

Next, calculate the change in price of fresh strawberries.Δy=yfinal−yinitial=$2.15−$2.35\Delta_y =_{y_{final}} -_{y_{initial}} = \$2.15 - \$2.35Δy​=yfinal​​−yinitial​​=$2.15−$2.35

STEP 6

Calculate the change in price of fresh strawberries.Δy=$2.15−$2.35=−$0.20\Delta_y = \$2.15 - \$2.35 = -\$0.20Δy​=$2.15−$2.35=−$0.20

STEP 7

Now, plug in the values into the formula for cross-price elasticity of demand.xy=(ΔQx/Qx)(Δy/Py)=(−250/1,800)(−0.20/2.35)_{xy} = \frac{(\Delta Q_x/Q_x)}{(\Delta_y/P_y)} = \frac{(-250/1,800)}{(-0.20/2.35)}xy​=(Δy​/Py​)(ΔQx​/Qx​)​=(−0.20/2.35)(−250/1,800)​

STEP 8

Calculate the cross-price elasticity of demand.xy=(−250/1,800)(−0.20/2.35)=0.14_{xy} = \frac{(-250/1,800)}{(-0.20/2.35)} =0.14xy​=(−0.20/2.35)(−250/1,800)​=0.14The cross-price elasticity of demand for the strawberries is0.14.

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First, calculate the change in quantity demanded of frozen strawberries.
$\Delta Q_x = Q_{x_{final}} - Q_{x_{initial}} =1,550 -1,800$

Calculate the change in quantity demanded of frozen strawberries.
$\Delta Q_x =1,550 -1,800 = -250$

Next, calculate the change in price of fresh strawberries.
$\Delta_y =_{y_{final}} -_{y_{initial}} = \$2.15 - \$2.35$

Calculate the change in price of fresh strawberries.
$\Delta_y = \$2.15 - \$2.35 = -\$0.20$

Now, plug in the values into the formula for cross-price elasticity of demand.
$_{xy} = \frac{(\Delta Q_x/Q_x)}{(\Delta_y/P_y)} = \frac{(-250/1,800)}{(-0.20/2.35)}$

Calculate the cross-price elasticity of demand.
$_{xy} = \frac{(-250/1,800)}{(-0.20/2.35)} =0.14$ The cross-price elasticity of demand for the strawberries is0.14.