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October 20, 2014

Homework Help: demand & Supply

Posted by Albert jason on Tuesday, October 17, 2006 at 12:42am.

If the demand for butter rises by 4% while the price of margarine rises by 8%, then calculate the cross price elasticity of demand of butter with respect to the price of margarine?


The formula for the cross-price elasticity is (%change in Qa)/(%change in Pb) Where Qa is the quantity demanded of good a, and Pb is the price of good b. Apply this formula. You have all the information you need.

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