Question #81256
The demand for petrol rises from 500 to 600 barrels when the price of a particular scooter is reduced from Rs. 25000 to Rs. 22000. Find out the cross elasticity of demand for the two. What is the nature of their relationship?
Expert's answer
Сross elasticity of demand:
E = (500+600)/(25000+22000)×(600-500)/(22000-25000) = -11/14100
The petrol and the scooter are complementary goods, so cross elasticity of demand is negative
E = (500+600)/(25000+22000)×(600-500)/(22000-25000) = -11/14100
The petrol and the scooter are complementary goods, so cross elasticity of demand is negative
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#340153 on Dec 2023
#340153 on Dec 2023