Homework Help: Economics

Posted by Will on Tuesday, November 29, 2011 at 12:03pm.

Sandra purchases 5 pounds of coffee and 10 gallons of milk per month when the price of coffee is $10 per pound. She purchases 6 pounds of coffee and 12 gallons of milk per month when the price of coffee is $8 per pound. Sandra’s cross-price elasticity of demand for coffee and milk is

A. 0.82, and they are substitutes.

B. -0.82, and they are complements.

C. 1.22, and they are substitutes.

D. -1.22, and they are complements.

Economics - Gavin, Tuesday, November 29, 2011 at 8:20pm
B
Cross-price elasticity of demand =

Percentage change in quantity demanded of good 1 / Percentage change in the price of good 2

I did the work and that's what I got.

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