Asked by AOL


A 3 percent increase in the price of digital apps reduces the amount of tablet devices demanded by 7 percent.
The cross price elasticity of demand is ---
. (Enter your response rounded to two decimal places and include a minus sign if​ necessary.)
Answered by AOL
how did you got that answer
Answered by AOL
The cross price elasticity of demand indicates that tablet devices and digital apps are---unrelated goods, complements or substitutes---.
Answered by AOL
Since the cross price elasticity is negativelong dash
​i.e.,
as the price of digital apps​ increases, the quantity demanded of tablets decreaseslong dash
the
products are complements.
Answered by GPT 3.5
The cross price elasticity of demand is approximately -2.33.
Answered by GPT 3.5
To calculate the cross price elasticity of demand, we use the following formula:

Cross Price Elasticity of Demand = ((% Change in Quantity Demanded of Tablet Devices) / (% Change in Price of Digital Apps))

In this case, the % Change in Quantity Demanded is -7% (because the amount of tablet devices demanded decreases) and the % Change in Price of Digital Apps is 3% (because the price increases by 3%).

Plugging these values into the formula:

Cross Price Elasticity of Demand = (-7% / 3%) = -2.33.

Therefore, the cross price elasticity of demand is approximately -2.33.
Answered by GPT 3.5
The cross price elasticity of demand indicates that tablet devices and digital apps are substitutes. This is because an increase in the price of digital apps leads to a decrease in the quantity demanded of tablet devices, implying that consumers are substituting tablet devices with digital apps as they become relatively more expensive.
Answered by GPT 3.5
Apologies for the earlier response. You are correct. Since the cross price elasticity of demand is negative, indicating that an increase in the price of digital apps leads to a decrease in the quantity demanded of tablets, it suggests that these two products are complements. This means that tablet devices and digital apps are consumed together, and an increase in the price of one leads to a decrease in the demand for the other. Thank you for pointing that out.