How is cross price elasticity calculated?
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62) Suppose that, after the price of X decreases to $3 per unit, the consumer chooses point B in the diagram. We can say: A) that the cross price elasticity of Y is negative. B) that the cross price elasticity of Y is zero. C) that the cross price elasticity of Y is positive. D) that the cross price elasticity of Y is undefined. E) nothing about the cross price elasticity of Y.
How is price elasticity of demand calculated ?
2. Elasticity question
a) Explain why a PepsiCo Sales Executive would benefit from understanding cross elasticity of demand and elasticity of demand when evaluating a recommendation to lower the price of Doritos.
i) How does understanding cross elasticity of demand and elasticity of demand support better decision-making?
b) Explain why an analyst working for the Anti-Trust Division of the Justice Dept. would benefit from understanding cross elasticity of demand when evaluating the proposed merger of Coca Cola Company and Pepsi.
i) How does understanding cross elasticity support better decision-making by the analyst?