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Homework answers / question archive / Consider the apple juice and orange juice markets
Consider the apple juice and orange juice markets. Suppose the current market price of a half gallon of apple juice is $2.50 and at this price 18 bottles of apple juice are demanded. Also, suppose the current market price for a half gallon of orange juice is $3.25 and at this price 17 bottles of orange juice are demanded. When the price of a half gallon of orange juice increases to $3.75, and the price of apple juice remains unchanged, the quantity demanded of orange juice decreases to 14 bottles and the quantity demanded of apple juice increases to 22 bottles. Using the midpoint method, what is the cross price elasticity of the demand for apple juice with regard to the price of orange juice?
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