Suppose that the cross price elasticity of demand between eggs and bacon is -0.5. What would you expect to happen purchases of bacon if the price of eggs rises by 10 percent? Concept Introduction: Cross Price Elasticity of demand: It refers to the degree of responsiveness to change in the quantity demanded of one product due to change in the price of another product. It can be calculated as follows: % c h a n g e i n q u a n t i t y d e m a n d e d o f p r o d u c t " x " % c h a n g e i n t h e p r i c e o f p r o d u c t " y " The goods will be substitute goods, if the cross price elasticity is positive, because any increase in the price of good "y", will increase the quantity demanded of good "x". The goods will be complemented goods, if the cross price elasticity is negative, because any increase in the price of good "y", will decrease the quantity demanded of good "x".

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Chapter 19, Problem 11P

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Suppose that the cross price elasticity of demand between eggs and bacon is -0.5. What would you expect to happen purchases of bacon if the price of eggs rises by 10 percent?

Concept Introduction:

Cross Price Elasticity of demand: It refers to the degree of responsiveness to change in the quantity demanded of one product due to change in the price of another product. It can be calculated as follows:

% change in quantity demanded of product "x" % change in the price of product "y"

The goods will be substitute goods, if the cross price elasticity is positive, because any increase in the price of good "y", will increase the quantity demanded of good "x".

The goods will be complemented goods, if the cross price elasticity is negative, because any increase in the price of good "y", will decrease the quantity demanded of good "x".

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