According to the u. S. Department of energy, the average price of gasoline in the u. S. Fell by 14% in 2015. The number of hybri

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According to the u. S. Department of energy, the average price of gasoline in the u. S. Fell by 14% in 2015. The number of hybri

d electric vehicles (hev) sold in the u. S. Fell by 36% in the same year. Calculate the cross-price elasticity of demand for hevs and gasoline.

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1 answer:

Rudiy27 · Answer 1 · 2023-03-13T11:41:48+03:00

The cross-price elasticity of demand for hevs and gasoline is 2.57.

<h3>What is cross-price elasticity of demand?</h3>

A cross-price elasticity of demand is an economic tool that measure the %change in quantity demand for a good after a change in the price of another

The demand is calculated by %change in the quantity demanded of one good over %change in the price of the other good.

Hence, the % of quanitty demanded is 36% and the % of change in the price is 14%

Cross-price elasticity of demand = 36% / 14%

Cross-price elasticity of demand = 2.57142857143

Cross-price elasticity of demand = 2.57

In conclusion, the cross-price elasticity of demand for hevs and gasoline is 2.57.

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