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 64 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
Gracias!


Dominic

  • Member
  • Posts: 328
Reply 3 on: Yesterday
Great answer, keep it coming :)

 

Did you know?

IgA antibodies protect body surfaces exposed to outside foreign substances. IgG antibodies are found in all body fluids. IgM antibodies are the first type of antibody made in response to an infection. IgE antibody levels are often high in people with allergies. IgD antibodies are found in tissues lining the abdomen and chest.

Did you know?

Blastomycosis is often misdiagnosed, resulting in tragic outcomes. It is caused by a fungus living in moist soil, in wooded areas of the United States and Canada. If inhaled, the fungus can cause mild breathing problems that may worsen and cause serious illness and even death.

Did you know?

It is widely believed that giving a daily oral dose of aspirin to heart attack patients improves their chances of survival because the aspirin blocks the formation of new blood clots.

Did you know?

The human body produces and destroys 15 million blood cells every second.

Did you know?

Eat fiber! A diet high in fiber can help lower cholesterol levels by as much as 10%.

For a complete list of videos, visit our video library