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24 December, 02:32

The quantity demanded of video game controllers increased from 1,800 to 1,900 when the price of video game consoles decreased from $300 to $275. What is the estimated cross-price elasticity of demand for video game controllers? Round your answer to the nearest hundredth. If elasticity is negative, make sure to include the "-" sign in your answer.

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  1. 24 December, 03:19
    0
    -0.67

    Explanation:

    Given that,

    Initial quantity demanded for video game controllers = 1,800 units

    New quantity demanded for video game controllers = 1,900 units

    Initial price of video game consoles = $300

    New price of video game consoles = $275

    Percentage change in quantity demanded for video game controllers:

    = (Change in quantity demanded : Initial quantity demanded) * 100

    = (100 : 1,800) * 100

    = 5.56%

    Percentage change in price of video game consoles:

    = (Change in price : Initial price) * 100

    = (-25 : 300) * 100

    = - 8.33%

    Therefore, the estimated cross-price elasticity of demand for video game controllers is as follows:

    = Percentage change in quantity demanded for video game controllers : Percentage change in price of video game consoles

    = 5.56 : (-8.33%)

    = - 0.67
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