1. If a 7 percent rise in the price of Pepsi increases the quantity of Coca Cola demanded by 4 percent and decreases the quantity of Pepsi demanded by 3 percent, calculate the cross price elasticity of demand for Coca Cola with respect to the price of Pepsi.

1. If a 7 percent rise in the price of Pepsi increases the quantity of Coca Cola demanded by 4 percent and decreases the quantity of Pepsi demanded by 3 percent, calculate the cross price elasticity of demand for Coca Cola with respect to the price of Pepsi.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 2CQQ: The price of a good rises from 8 to 12, and the quantity demanded falls from 110 to 90 units....

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Question

1. If a 7 percent rise in the price of Pepsi increases the quantity of Coca Cola demanded by 4 percent
and decreases the quantity of Pepsi demanded by 3 percent, calculate the cross price elasticity of
demand for Coca Cola with respect to the price of Pepsi.

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