The proce elasticity of demand for scented candles is 15 The

The proce elasticity of demand for scented candles is 1.5. The price elasticity of demand for tapered candles is 2.0. The cross elasticity of demand for tapered candles with respect to the price of a scented candle is 1.5. If the price of a scented candle rises by 4 percent, the percentage change in the quantity demanded of scented candles is a decrease of percent. If the price of a scented candle nses by 4 percent, the percentage change in the quantity demanded of tapered candles is an increase of percent.

Solution

Price elasticity of the scented candles = % change in demand for scented candles / % change in the price for scented candles

1.5 = % change in demand for scented candles / 4%

% change in demand for scented candles = 6% decline

2)

Cross elasticity of the tapered candles = % change in demand for tapered candles / % change in the price for scented candles

1.5 = % change in demand for scented candles / 4%

% change in demand for tapered candles = 6% increase