B2. Elasticity

Suppose that the price of product A decreases from $22 to $18 and, as a result, the quantity purchased of A increases from 200 to 250, the quantity purchased of B increases from 50 to 60 and the quantity purchased of product C falls from 600 to 550.

1. What is the price elasticity of demand of product A? (4 marks)

1. What is the cross-elasticity of product A for product B? (4 marks)

1. What is the cross-elasticity of product A for product C? (4 marks)

1. Comment on the three elasticity measures - that is, what do the numbers mean? (3 marks)