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1.2.3 Price, income and cross elasticities of demand

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Question 12

Espresso machines and compatible coffee pods are complementary goods with an estimated cross elasticity of demand of -4. Currently, 1,200,000 coffee pods are sold in the UK each week.

With reference to the information provided, calculate the new quantity demanded of coffee pods per week, following a 3% increase in the price of espresso machines. You are advised to show your working.

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1.2.3 Price, income and cross elasticities of demand Questions

  1. A Level
  2. /Economics
  3. /1.2.3 Price, income and cross elasticities of demand