According to data from the U.S. Department of Energy, sales of the fuel-efficient Toyota Prius hybrid fell from 194,108 vehicles sold in 2014 to 180,603 in 2015. Over the same period, according to data from the U.S. Energy Information Administration, the average price of regular gasoline fell from $3.36 to $2.43 per gallon. Using the midpoint method, calculate the cross-price elasticity of demand between Toyota Priuses and regular gasoline. According to your estimate of the cross-price elasticity, are the two goods complements or substitutes? Does your answer make sense?
According to data from the U.S. Department of Energy, sales of the fuel-efficient Toyota Prius hybrid fell from 194,108 vehicles sold in 2014 to 180,603 in 2015. Over the same period, according to data from the U.S. Energy Information Administration, the average price of regular gasoline fell from $3.36 to $2.43 per gallon. Using the midpoint method, calculate the cross-price elasticity of demand between Toyota Priuses and regular gasoline. According to your estimate of the cross-price elasticity, are the two goods complements or substitutes? Does your answer make sense?
Chapter5: Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...
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According to data from the U.S. Department of Energy, sales of the fuel-efficient Toyota Prius hybrid fell from 194,108 vehicles sold in 2014 to 180,603 in 2015. Over the same period, according to data from the U.S. Energy Information Administration, the average
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