The price of peanut butter increases from $2.50 to $3.00 per jar, and the quantity of jelly demanded falls from 35 jars to 28 jars. Using the midpoint formula, calculate the cross-price elasticity of demand. Report your answer to two decimal places.
The price of peanut butter increases from $2.50 to $3.00 per jar, and the quantity of jelly demanded falls from 35 jars to 28 jars. Using the midpoint formula, calculate the cross-price elasticity of demand. Report your answer to two decimal places.
Chapter5: Price Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 1SQP
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Price elasticity (mid-point formula)
= [( θ2-θ1)/(( θ1 +θ2)/2)]/[(p2 –p1 )/((p1 +p2)/2)]
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