Answer:
-0.41
Explanation:
The computation of the cross price elasticity of demand is shown below:
Cross price elasticity of demand is
= (Change in quantity demanded) ÷ (change in price)
= (Q2 – Q1) ÷ [(Q2 + Q1) ÷ 2] ÷ (P2 – P1) ÷ [(P2 + P1) ÷2]
= {(2,550 - 2,350) ÷ [(2,350 + 2,550) ÷ 2]} ÷ ($3.15 - $3.85) ÷ [(3.15 + $3.85) ÷ 2]
= 0.0816 ÷ -0.2
= -0.41
Hence, the cross price elasticity of demand is -0.41
