00:01
Hello students, we are given a question here that the when price of tea rises from where 10 to 15 per cup, okay? and the demand for coffee rises from 3 ,000 to 5 ,000 cups a day.
00:14
We need to determine the cross price elasticity as well as what kind of relation exists between the two goods.
00:21
So we can write first step is like cross price elasticity, okay? so cross price elasticity is nothing but equal to percentage change in quantity demanded okay students percentage change in quantity quantity demanded okay students then divided by here we can say that divided by percentage change change in a price okay so now we can just say that there percentage change in quantity demanded means final quantity minus initial quantity divided by initial quantity times hundred it means as we are given here that the demand quantity demanded for coffee rises from 3 ,000 to 5 ,000 it means it should be like 5 ,000 minus 3 ,000 divided by 3 ,000 and times 100 okay students then divided by percentage change in price it should be like 15 minus 10 divided by 10 15 minus 10 divided by 10 and times 100 now as we are supposed to know that here 5 ,000 minus 3 000 it means 2 000 2 000 divided by 3 000 okay students then divided by 3 as we can see 100 can be cancelled out by 100 and here 15 minus 10 it means 15 minus 10 is nothing but equal to 5 5 divided by 10 it means 1 divided by 2 so 2 twos of 4, okay, students and divided by 3.
02:03
So what we will get here, it can be written as around 1 .33.
02:07
Now, we will go to the b part.
02:11
So we can say that since elasticity is greater than 1...