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In the graph on the right, the demand for hot dog buns has changed because the price of hot dogs has risen from $2.00
to $2.50 per package.
The cross-price elasticity of demand between hot dogs and hot dog buns is (Use the midpoint formula and enter your
response rounded to two decimal places. Be sure to include the minus sign if hecessary)

Respuesta :

The calculation depicts that the cross elasticity of demand will be -0.625.

How to calculate the elasticity

From the graph, the percentage change in the price of hot dogs will be:

= (3-2)/[(3 + 2)/2]

= 1/2.50

= 0.40

The percentage change in the quantity of hot dogs will be:

= (7000 - 9000) / (9000 + 7000) / 2

= -2000/8000

= -0.25

The cross elasticity of demand will be:

= -0.25/0.40

= -0.625

In conclusion, the cross elasticity of demand is -0.625.

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