data collected in the imaginary economy of karabekiar reveals that when price of bork increased by 20%, the quantity of bork sold decreased by 15% and the quantity of perf demanded decreased by 10% what is the cross-price elasticity of demand between perf and bork?
To calculate the cross-price elasticity of demand between two goods, you need to measure how the quantity demanded of one good changes in response to a change in the price of another good.
The formula for cross-price elasticity of demand is:
Cross-Price Elasticity of Demand = (% Change in Quantity Demanded of Good A) / (% Change in Price of Good B)
In this case, we have the following information:
% Change in Quantity Demanded of Bork = -15% (since the quantity of bork sold decreased by 15%)
% Change in Price of Perf = 20% (since the price of bork increased by 20%)
Using these values in the formula, we get:
Cross-Price Elasticity of Demand = (-15%)/20%
To simplify the calculation, let's express the percentages as decimal values:
Cross-Price Elasticity of Demand = (-0.15)/0.20
Simplifying further, we get:
Cross-Price Elasticity of Demand = -0.75
Therefore, the cross-price elasticity of demand between Perf and Bork is -0.75.