The price of a large pizza decreased from $20,.00 to $16.00. As a result, the qu

Question

The price of a large pizza decreased from $20,.00 to $16.00. As a result, the quantity demanded of skateboards incroased from 25000 to 20o v 1st attempt Part 1 (1 point) 0 See Hint Using the midpoint formula, what is the percentage change observed for the price of alarge pizza? Give your answer tot wo decimal places Part 2 (1 point) Using the midpoint formula, what is the percentage change observed for the quantity demanded of skateboards? Give your answer to two decimal places. 96 ? See Hint Part 3 (1 point) What is the cross-price elasticity of demand between pizzas and skateboards? Give your answer to two decimal places

Explanation / Answer

Answer

% change using Mid point for any X = ((Xnew - Xold)/((Xnew + Xold) /2))*100

1) Using above formula,

% change using Midpoint for Price Of Pizza = ((Pnew - Pold)/((Pnew + Pold) /2))*100

Mow, Pnew = 16 and Pold = 20.

Hence, % change in price of Pizza = ((16-20)((16 + 20)/2))*100 = -(4/18)*100

= (-) 22.22%.

This Implies that Price decreased by 22.22%.

2) Using above formula,

% change using Midpoint for Demand Of skateboard = ((Qnew - Qold)/((Qnew + Qold) /2))*100

Mow, Qnew = 270.00 and Qold = 250.00

Hence, % change Quantity Demanded of skateboard = ((270-250)((270 + 250)/2))*100 = (20/260)*100

= 7.69%.

This Implies that Quantity Demanded of skateboard increased by 7.69%.

c)

Cross Price Elasticity of demand between Pizze and Skateboard

= % change Quantity Demanded of skateboard / % change in price of Pizza

= (2000/260)/(-400/18)

=(-)0.35.

As we acn see that Cross price elasticity is negative we can consider Pizza and Skateboard at complimentary Goods.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.