A 4 percent increase in the price of digital apps reduces the amount of tablet devices...

A 4 percent increase in the price of digital apps reduces the amount of tablet devices demanded by 10percent.

The cross price elasticity of demand is__. (Enter your response rounded to two decimal places and include a minus sign if necessary.)

Solutions

Expert Solution

Cross price elasticity = %∆ in demand for tablet devices / %∆ in price of apps

Cross price elasticity = -10% / 4% = (-)2.5

So cross price elasticity = (-) 2.5

Rahul Sunny answered 1 year ago

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