-Bill's Office Furniture sells office chairs and desks.Bill's has changed the price per chair by $10 in each of four successive weeks.Figure 5-12 shows the four prices along with the corresponding sales of desks.What is the cross-price elasticity of demand of desks with respect to chairs when the price of a chair changes in the $45 to $55 range?

Question

Quizplus · Accepted Answer

Cross-price elasticity of demand measures how the quantity demanded of one good (desks) responds to a price change in another good (chairs). A negative value indicates that the goods are complements. In this case, the elasticity is -0.5, suggesting that a 1% increase in the price of chairs leads to a 0.5% decrease in the quantity demanded of desks.

-Bill's Office Furniture Sells Office Chairs and Desks