One winter recently, the price of antique furniture increased by 10 percent and the quantity demanded decreased by 30 percent,

Question

2 years ago

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One winter recently, the price of antique furniture increased by 10 percent and the quantity demanded decreased by 30 percent,

and with no change in the price of refinishing products, the quantity of refinishing products demanded decreased by 8 percent. What is the cross elasticity of demand for refinishing products with respect to the price of antique furniture?

Social Studies

1 answer:

Monica [59] · Answer 1 · 2022-05-10T04:11:23+03:00

Answer:

The cross-price elasticity is - 0.8.

Explanation:

The price of antique furniture increased by 10 percent and the quantity demanded decreased by 30 percent, and with no change in the price of refinishing products, the quantity of refinishing products demanded decreased by 8 percent.

The cross-price elasticity of demand measures the change in the demand for a product due to a change in the price of a related good. Negative cross-price elasticity means the goods are complements. Positive cross-price elasticity implies that the goods are substitutes.

Cross price elasticity

= $\frac{\Delta Qy}{\Delta Px}$

= $\frac{-8}{10}$

= - 0.8

The cross price elasticity is negative which means that the goods are complements.

One winter​ recently, the price of antique furniture increased by 10 percent and the quantity demanded decreased by 30 ​percent,

One winter recently, the price of antique furniture increased by 10 percent and the quantity demanded decreased by 30 percent,