Question

If the percentage change in the quantity demanded of a commodity A is 50% and the percentage change in the price of commodity B is 33.33% determine the coefficient of elasticity and what type of commodities are comodity A and B

Answer 1

If the percentage change in the quantity demanded of a commodity A is 50% and the percentage change in the price of commodity B is 33.33%, then the coefficient of elasticity is:

Ed = 0.5/0.3333 = 1.5, so commodities A and B are substitutes.