3. Suppose a 10% increase I price of a different product (such y), has resulted in a 30%decrease in the demand for OUR product (say, product X). What can you tell about crosselasticity of demand? (Calculate and demonstrate your answer). Are x and y substitutes orcomplement? Why?

Answered: 3. Suppose a 10% increase I price of a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. Suppose a 10% increase I price of a different product (such y), has resulted in a 30%
decrease in the demand for OUR product (say, product X). What can you tell about cross
elasticity of demand? (Calculate and demonstrate your answer). Are x and y substitutes or
complement? Why?

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complement goods are those which is depend on each other like bread and butter , if the change in any of product price it will impact on the other as well , elasticity of these goods is negative , substitute goods is goods which is substitute of each other like tea and coffee and elasticity of these goods is positive here we calculate the elasticity and conclude the type of good which are as follow-

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