Question
Suppose that you are a staff economist with an economic consulting firm. The operator of a local harbour has commissioned your firm to market analysis
Suppose that you are a staff economist with an economic consulting firm. The operator of a local harbour has commissioned your firm to market analysis of the demand for berths (parking spaces) for boats. Your firm finds that the cross-price elasticity between berths and boat fuel is -0.95. You've just completed your study of elasticities and are asked to make a recommendation based on this information.
If the price of boat fuel in the area decreases by 4% with no change in the price of a berth, the quantity of berths that people demand will increase or decrease? by how much percent?
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