Practice prompt · Q:economics-and-market-foundations/compute-cross-price-elasticity-001

Keep focal quantity and driver price in order

Computes cross price elasticity and preserves the directional product relationship.

Updated Aug 7, 2026 Review due Nov 7, 2026

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Tea price rises from $4 to $5 while coffee demand rises from 100 to 112 weekly units under stated held-constant conditions. Which calculation and label are controlled?

Choose the best answer. a Coffee quantity responds by 11.3208%, tea price by 22.2222%, and cross-price elasticity is about +0.5094; the sign supports coffee as a substitute for tea in this scoped relationship. b Elasticity is +12 because coffee demand rose twelve units, proving close legal-market competition. c Because magnitude is below one, coffee and tea are complements.

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Answer: a

Choice a. (12/106) / (1/4.5) = +0.5094 for coffee quantity responding to tea price.