Suppose the change in the price of good A from $20 to $70 causes the individual's demand for good B to shift from D2 to D3. What is the cross price elasticity? Good A Good B $140 STO 140
Suppose the change in the price of good A from $20 to $70 causes the individual's demand for good B to shift from D2 to D3. What is the cross price elasticity? Good A Good B $140 STO 140
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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What is the cross
Transcribed Image Text:Suppose the change in the price of good A from $20 to $70 causes the individual's
demand for good B to shift from D2 to D3.
What is the cross price elasticity?
Good A
Good B
$140
$140
500
S70
S70
D.
35 45
70
105
140
70
105
140
Transcribed Image Text:The graphs show the demand for two goods by a single individual.
1. The price for good A and B start out at $20 and the individual's demand is D2 on
both graphs.
2. Then the price of good A rises to $70.
Use the endpoint method for all elasticity calculations.
Good A
Good B
$140
$140
D,
10
35 45
70
105
140
70
105
140
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