question\nthe quantity demanded of video game controllers increased from 1,800 to 1,900 when the price of…

question\nthe quantity demanded of video game controllers increased from 1,800 to 1,900 when the price of video game consoles decreased from $300 to $275. what is the estimated cross - price elasticity of demand for video game controllers? round your answer to the nearest hundredth. if elasticity is negative, make sure to include the \.-\ sign in your answer.\nprovide your answer below:

question\nthe quantity demanded of video game controllers increased from 1,800 to 1,900 when the price of video game consoles decreased from $300 to $275. what is the estimated cross - price elasticity of demand for video game controllers? round your answer to the nearest hundredth. if elasticity is negative, make sure to include the \.-\ sign in your answer.\nprovide your answer below:

Answer

Explanation:

Step1: Calculate the percentage change in quantity demanded

The formula for percentage change in quantity demanded is $\frac{Q_2 - Q_1}{\frac{Q_2+Q_1}{2}}\times100%$. Here, $Q_1 = 1800$, $Q_2=1900$. $\frac{1900 - 1800}{\frac{1900 + 1800}{2}}\times100%=\frac{100}{\frac{3700}{2}}\times100%=\frac{100}{1850}\times100%\approx 5.41%$

Step2: Calculate the percentage change in price

The formula for percentage change in price is $\frac{P_2 - P_1}{\frac{P_2+P_1}{2}}\times100%$. Here, $P_1 = 300$, $P_2 = 275$. $\frac{275-300}{\frac{275 + 300}{2}}\times100%=\frac{- 25}{\frac{575}{2}}\times100%=\frac{-25}{287.5}\times100%\approx - 8.696%$

Step3: Calculate cross - price elasticity of demand

The formula for cross - price elasticity of demand ($E_{xy}$) is $E_{xy}=\frac{\text{Percentage change in quantity demanded of good X}}{\text{Percentage change in price of good Y}}$. $E_{xy}=\frac{5.41%}{-8.696%}\approx - 0.62$

Answer:

-0.62