Be a thinker-ca late and explain "Light-Bites", a sandwich shop, finds that when its rival, "Super-Snack",
reduces the price of its chicken wraps from $5 to $4.60, the demand for
"Light-Bites" sandwiches falls from 400 sandwiches a week to 340
sandwiches a week. In addition, "Super-Snack" finds that following the fall
in price of their chicken wraps, the demand for soft drinks rises from 600
cans to 630 cans per week.
1 Calculate the cross elasticity of demand between "Light-Bite"
sandwiches and "Super-Snack” chicken wraps.
2 Explain the relationship above in terms of cross elasticity of demand.
3 Calculate the cross elasticity of demand between "Super-Snack"
sandwiches and the "Super-Snack" soft drinks.
4 Explain the relationship above in terms of cross elasticity of demand.