Question

In: Economics

This week, Super-Save Supermarket lowered the price of apples from $1 to 90 cents per pound....

  • This week, Super-Save Supermarket lowered the price of apples from $1 to 90 cents per pound. The quantity of apples sold last week was 200 pounds. This week, the quantity sold was 250 pounds. Calculate the price elasticity of demand. Is it elastic, inelastic, or unitary elastic? What happens to total revenue?
  • Using the information given in the previous question, assume that last week Super-Save Supermarket sold 150 pounds of bananas and this week it sold 120 pounds of bananas. Are bananas and apples complements or substitutes? What is the cross elasticity of demand?

My elasticity is equaling 2. I'm I correct or I'm missing something?

Solutions

Expert Solution

Ans) Price elasticity of demand (PED) is the responsiveness of quantity demanded to change in price.

Cross price elasticity (XED) is the responsiveness of quantity demanded of one good to change in price of another good.

Rahul Sunny answered 2 hours ago
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