Question

Suppose, the cross elasticity of demand for beef with respect to chicken is E=
+1.5. (i) If price of chicken is increased by 40%, what will happen to the demand for beef?
(ii) What kind of relationship exists between beef and chicken in this case?

Answer 1

the demand for beef will increase due to increase in the price of chicken and the relationship between beef and chicken is that both are close substitutes to each other