A rise in the price of a smoothie from? $2 to? $3 results in a decrease in the quantity of smoothies demanded from 220 million to 180 million a day and at? today's price of a? muffin, $1.50, the quantity of muffins demanded increases from 80 million to 100 million a day.
1. Calculate the percentage change in the price of a smoothie and the percentage change in the quantity demanded of smoothies.
?Hint: Use the average price and average quantity to calculate the percentage changes.
The price of a smoothie changes by........ percent and the quantity demanded of smoothies changes by
.......percent.
2. Calculate the price elasticity of demand for smoothies.
The price elasticity of demand for smoothies is 0.5 or 2 ?
3. Is the demand for smoothies elastic or? inelastic?
4. Calculate the cross elasticity of demand for muffins with respect to the price of a smoothie.
The cross elasticity of demand for muffins with respect to the price of a smoothie is ?