Calculation Arc Cross Price Elasticity Between Products

Question

Assume the demand for product A can be expressed as Qa = 200 – 5Pa + 3Pb and the demand for Product B can be expressed as Qb = 300-2Pb +Pa. Currently, market prices and quantities for these goods are Pa = 5 and Pb = 2.

Calculate the arc cross price elasticity between product A and product B using prices for product B of 2 and 3

Summary

This question belongs to micro economics and discusses about arc cross price elasticity between products.

Total Word Count 18

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