Part 1: If the cross price elasticity of demand between ski lift tickets and ski rentals is negative 0.20, this means that they are complementary goods. A 15 percent increase in the price of ski lift tickets would lead to a decrease in the demand for ski rentals.
Part 2: The demand for ski rentals would fall.
Suppose that the cross price elasticity of demand between ski lift tickets and ski rentals is negative 0.20 What would you expect to happen to the sales of ski rentals if the price of ski lift tickets rises by 15 percent?
Part 2
The demand for ski rentals would---raise or fall---.
3 answers
fall--- percent (Enter your response rounded to one decimal place.)
To calculate the percentage fall in demand for ski rentals, we need to multiply the cross price elasticity of demand (-0.20) by the percentage change in price of ski lift tickets (15%).
Percentage fall = Cross price elasticity of demand * Percentage change in price
= -0.20 * 15%
= -3%
Therefore, we would expect the demand for ski rentals to fall by approximately 3%.
Percentage fall = Cross price elasticity of demand * Percentage change in price
= -0.20 * 15%
= -3%
Therefore, we would expect the demand for ski rentals to fall by approximately 3%.
1 answer