The crossprice elasticity of coffee and tea is 066 where the

The cross-price elasticity of coffee and tea is 0.66, where the percentage change in quantity is for coffee and the percentage change in price is measured for tea. Calculate the percentage that the quantity demanded of coffee will change if the price of tea increases by 4.0%. Enter your response to one decimal place, and enter a negative number if the quantity demanded decreases.

Solution

the change in demand of cofee is = 0.66*4= 2.64%

it means the demand for coffee will be increased by 2.64%