A BevMo! store has estimated that the cross price elasticity between the number of bottles demanded of Macallan (12 years) and the price of Roquefort cheese is -1.8. A long strike in the region of Roquefort-sur-Soulzon is expected to increase the price o
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A BevMo! store has estimated that the cross price elasticity between the number of bottles demanded of Macallan (12 years) and the price of Roquefort cheese is -1.8. A long strike in the region of Roquefort-sur-Soulzon is expected to increase the price of that cheese by 16.5% at the store. Based on this information, the number of bottles of Macallan demanded will:
a) Increase by 20.5%
b) Increase by 8%
c) Decrease by 29.7%
d) Decreased by 18.6%
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Billye April 2, 2023 в 13:28The answer is c) Decrease by 29.7%. Cross price elasticity measures the responsiveness of demand for one product to a change in the price of another product. In this case, the cross price elasticity between Macallan (12 years) and Roquefort cheese is negative, indicating that they are complementary goods - as the price of Roquefort cheese increases, the demand for Macallan will decrease. The strike in the region of Roquefort-sur-Soulzon is expected to increase the price of Roquefort cheese by 16.5%. Using the cross price elasticity of -1.8, we can estimate the percentage change in demand for Macallan as: % Change in Demand = (Cross Price Elasticity) x (% Change in Price of Roquefort Cheese) % Change in Demand = (-1.8) x (16.5%) % Change in Demand = -29.7% Therefore, the number of bottles of Macallan demanded will decrease by 29.7%. The correct answer is c) Decrease by 29.7%.
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