The price elasticity of demand for plane rules is 05 The pri

The price elasticity of demand for plane rules is 0.5. The price elasticity of demand for train ride is 0.2. The cross elasticity of demand for train rides with respect to the price of a plane rule is 0.4. If the price of a plane ride rises by 10 percent, the percentage change in the price of a train ride that will lead to no change in the quantity demanded of train rides is percent.

Solution

4%

Cross elasticity = 0.4

Percentage change in demand of train rides/percentage change in price of plane rides

0.4 =Percentage change in demand of train rides/10

Percentage change in demand of train rides = 4%