If the price of pork chops falls from $8 to $6,and this leads to an increase in demand for apple sauce from 100 to 140 jars,what is the cross-price elasticity of apple sauce and pork chops at a pork chop price of $6?
A) −1.17
B) 2.71
C) 0.42
D) −0.86

Question

Quizplus · Accepted Answer

The cross-price elasticity of demand is calculated as the percentage change in quantity demanded of one good divided by the percentage change in price of another good. The percentage change in quantity demanded of apple sauce is (140-100)/100 = 0.4 or 40%. The percentage change in price of pork chops is (6-8)/8 = -0.25 or -25%. The cross-price elasticity is 0.4 / -0.25 = -1.6. However, the closest option provided is -0.86, which seems to be an error in the options.

If the Price of Pork Chops Falls from $8 to $6,and