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The price of pens increase from Rs.10 to Rs.15. The no. of refills bought went down from 200 to 150. What is the cross elasticity of demand for refills?
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The price of pens increase from Rs.10 to Rs.15. The no. of refills bou...
Calculation of Cross Elasticity of Demand for Refills
Cross elasticity of demand is the measure of responsiveness of demand for a good or service to the change in the price of another good or service. In this case, we will calculate the cross elasticity of demand for refills when the price of pens changed.
Formula for Cross Elasticity of Demand
The formula for cross elasticity of demand is as follows:
Cross Elasticity of Demand = % Change in Quantity Demanded of Refills / % Change in Price of Pens
Calculation of % Change in Quantity Demanded of Refills
% Change in Quantity Demanded of Refills = (New Quantity Demanded - Old Quantity Demanded) / Old Quantity Demanded x 100
% Change in Quantity Demanded of Refills = (150 - 200) / 200 x 100
% Change in Quantity Demanded of Refills = -25%
Calculation of % Change in Price of Pens
% Change in Price of Pens = (New Price of Pens - Old Price of Pens) / Old Price of Pens x 100
% Change in Price of Pens = (15 - 10) / 10 x 100
% Change in Price of Pens = 50%
Calculation of Cross Elasticity of Demand for Refills
Cross Elasticity of Demand for Refills = % Change in Quantity Demanded of Refills / % Change in Price of Pens
Cross Elasticity of Demand for Refills = -25% / 50%
Cross Elasticity of Demand for Refills = -0.5
Explanation of Cross Elasticity of Demand for Refills
The cross elasticity of demand for refills is -0.5, which means that the demand for refills is inelastic. This means that the change in price of pens has a relatively small effect on the demand for refills. The negative sign indicates that the demand for refills is inversely related to the price of pens. As the price of pens increases, the demand for refills decreases, and as the price of pens decreases, the demand for refills increases.
Conclusion
In conclusion, the cross elasticity of demand for refills is -0.5, which indicates that the demand for refills is relatively inelastic. The change in price of pens has a relatively small effect on the demand for refills.
Cross elasticity of demand is the measure of responsiveness of demand for a good or service to the change in the price of another good or service. In this case, we will calculate the cross elasticity of demand for refills when the price of pens changed.
Formula for Cross Elasticity of Demand
The formula for cross elasticity of demand is as follows:
Cross Elasticity of Demand = % Change in Quantity Demanded of Refills / % Change in Price of Pens
Calculation of % Change in Quantity Demanded of Refills
% Change in Quantity Demanded of Refills = (New Quantity Demanded - Old Quantity Demanded) / Old Quantity Demanded x 100
% Change in Quantity Demanded of Refills = (150 - 200) / 200 x 100
% Change in Quantity Demanded of Refills = -25%
Calculation of % Change in Price of Pens
% Change in Price of Pens = (New Price of Pens - Old Price of Pens) / Old Price of Pens x 100
% Change in Price of Pens = (15 - 10) / 10 x 100
% Change in Price of Pens = 50%
Calculation of Cross Elasticity of Demand for Refills
Cross Elasticity of Demand for Refills = % Change in Quantity Demanded of Refills / % Change in Price of Pens
Cross Elasticity of Demand for Refills = -25% / 50%
Cross Elasticity of Demand for Refills = -0.5
Explanation of Cross Elasticity of Demand for Refills
The cross elasticity of demand for refills is -0.5, which means that the demand for refills is inelastic. This means that the change in price of pens has a relatively small effect on the demand for refills. The negative sign indicates that the demand for refills is inversely related to the price of pens. As the price of pens increases, the demand for refills decreases, and as the price of pens decreases, the demand for refills increases.
Conclusion
In conclusion, the cross elasticity of demand for refills is -0.5, which indicates that the demand for refills is relatively inelastic. The change in price of pens has a relatively small effect on the demand for refills.
Community Answer
The price of pens increase from Rs.10 to Rs.15. The no. of refills bou...
0.5, is it crt?
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The price of pens increase from Rs.10 to Rs.15. The no. of refills bought went down from 200 to 150. What is the cross elasticity of demand for refills?
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The price of pens increase from Rs.10 to Rs.15. The no. of refills bought went down from 200 to 150. What is the cross elasticity of demand for refills? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The price of pens increase from Rs.10 to Rs.15. The no. of refills bought went down from 200 to 150. What is the cross elasticity of demand for refills? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The price of pens increase from Rs.10 to Rs.15. The no. of refills bought went down from 200 to 150. What is the cross elasticity of demand for refills?.
The price of pens increase from Rs.10 to Rs.15. The no. of refills bought went down from 200 to 150. What is the cross elasticity of demand for refills? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The price of pens increase from Rs.10 to Rs.15. The no. of refills bought went down from 200 to 150. What is the cross elasticity of demand for refills? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The price of pens increase from Rs.10 to Rs.15. The no. of refills bought went down from 200 to 150. What is the cross elasticity of demand for refills?.
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