Question

A 10 percent decrease in the price of a Pepsi decreases the demand for a Coca-Cola by 50 percent. The cross elasticity of demand between a Pepsi and Coca-Cola is ?

Answer 1

the cross elasticity of demand between a Pepsi and Coca-Cola is 5

Step-by-step explanation:

The computation of the cross elasticity of demand is shown below:

= Percentage change in quantity demanded of one product ÷ percentage change in the price of other product

= -50 ÷ -10

= 5

Hence, the cross elasticity of demand between a Pepsi and Coca-Cola is 5

We simply applied the above formula so that the correct value could come

And, the same is to be considered