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Answer :
Final answer:
The cross price elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good. To calculate the cross price elasticity of demand for plug-in hybrid vehicles with respect to gas prices, we use the midpoint formula. By calculating the percentage change in quantity demanded and the percentage change in price, we can determine the cross price elasticity. This value helps us understand the relationship between gas prices and plug-in hybrid sales. Based on this information, we can answer questions about the impact of gas price changes on plug-in hybrid sales.
Explanation:
To calculate the cross price elasticity of demand for plug-in hybrid vehicles with respect to gas prices, we will use the midpoint formula. The midpoint formula is used to calculate the percentage change in quantity demanded and the percentage change in price.
a) Using the midpoint formula, the Quantity of plug-in hybrids sales rose % as Gas Prices rose:
Percentage Change in Quantity Demanded = ((2022Q of plug-in hybrids - 2021Q of plug-in hybrids) / ((2022Q of plug-in hybrids + 2021Q of plug-in hybrids) / 2)) * 100
Percentage Change in Price = ((2022 Price of gas - 2021 Price of gas) / ((2022 Price of gas + 2021 Price of gas) / 2)) * 100
b) Put the two together to calculate the cross price elasticity of demand for plug-in hybrids with respect to the price of gas, using the midpoint formula:
Cross Price Elasticity = (Percentage Change in Quantity Demanded) / (Percentage Change in Price)
c) Use the value for the cross price elasticity of demand from part a to answer the following questions:
e) If gas prices rise 5% next year, what will happen to plug-in hybrid sales if all other factors stay constant?
f) How much would gas prices have to fall in order to decrease plug-in hybrid sales by 30%?
Learn more about calculating cross price elasticity of demand for plug-in hybrid vehicles here:
https://brainly.com/question/31293339
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Final answer:
The cross price elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good. To calculate the cross price elasticity of demand for plug-in hybrid vehicles with respect to gas prices, we use the midpoint formula. By calculating the percentage change in quantity demanded and the percentage change in price, we can determine the cross price elasticity. This value helps us understand the relationship between gas prices and plug-in hybrid sales. Based on this information, we can answer questions about the impact of gas price changes on plug-in hybrid sales.
Explanation:
To calculate the cross price elasticity of demand for plug-in hybrid vehicles with respect to gas prices, we will use the midpoint formula. The midpoint formula is used to calculate the percentage change in quantity demanded and the percentage change in price.
a) Using the midpoint formula, the Quantity of plug-in hybrids sales rose % as Gas Prices rose:
Percentage Change in Quantity Demanded = ((2022Q of plug-in hybrids - 2021Q of plug-in hybrids) / ((2022Q of plug-in hybrids + 2021Q of plug-in hybrids) / 2)) * 100
Percentage Change in Price = ((2022 Price of gas - 2021 Price of gas) / ((2022 Price of gas + 2021 Price of gas) / 2)) * 100
b) Put the two together to calculate the cross price elasticity of demand for plug-in hybrids with respect to the price of gas, using the midpoint formula:
Cross Price Elasticity = (Percentage Change in Quantity Demanded) / (Percentage Change in Price)
c) Use the value for the cross price elasticity of demand from part a to answer the following questions:
e) If gas prices rise 5% next year, what will happen to plug-in hybrid sales if all other factors stay constant?
f) How much would gas prices have to fall in order to decrease plug-in hybrid sales by 30%?
Learn more about calculating cross price elasticity of demand for plug-in hybrid vehicles here:
https://brainly.com/question/31293339
#SPJ14
