This topic contains a solution. Click here to go to the answer

Author Question: When the price of a gallon of orange juice rises from 1.50 to 2.00, the number of gallons of apple ... (Read 79 times)

c0205847

  • Hero Member
  • *****
  • Posts: 531
When the price of a gallon of orange juice rises from 1.50 to 2.00, the number of gallons of apple juice demanded rises from 20,000 to 30,000 per year.
 
  Use the midpoint formula to calculate the cross-price elasticity between orange juice and apple juice. What does the sign imply about the relationship between these two goods?

Question 2

What is the economic problem?
 
  What will be an ideal response?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

bimper21

  • Sr. Member
  • ****
  • Posts: 309
Answer to Question 1

Percentage change in quantity of apple juice demanded = (30,000-20,000)/25,000
= 10,000/25,000 = 40 . Percentage change in the price of orange juice = (2.00 - 1.50)/1.75 = 0.50/1.75 = 28.6.
cross price elasticity = 40/28.6 = 1.4.

Because the cross-price elasticity is positive, this implies that the two goods are substitutes.

Answer to Question 2

The economic problem is finding a way for a society to answer the three basic economic questions (what will be produced?, how will it be produced?, and who will get what is produced?) given that resources are scarce.




c0205847

  • Member
  • Posts: 531
Reply 2 on: Jun 29, 2018
Excellent


nothere

  • Member
  • Posts: 324
Reply 3 on: Yesterday
Great answer, keep it coming :)

 

Did you know?

The most common treatment options for addiction include psychotherapy, support groups, and individual counseling.

Did you know?

People about to have surgery must tell their health care providers about all supplements they take.

Did you know?

Amoebae are the simplest type of protozoans, and are characterized by a feeding and dividing trophozoite stage that moves by temporary extensions called pseudopodia or false feet.

Did you know?

Approximately 500,000 babies are born each year in the United States to teenage mothers.

Did you know?

Atropine was named after the Greek goddess Atropos, the oldest and ugliest of the three sisters known as the Fates, who controlled the destiny of men.

For a complete list of videos, visit our video library