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You Are the Manager of a Local Flower Shop and You

Question 70

Multiple Choice

You are the manager of a local flower shop and you compete with one other flower shop in your area. You estimate the cross- price elasticity of demand between your flowers and your competitor's flowers to be 2.60. If your competitor decreases the price of her flowers by 10 percent, you should expect which of the following?


A) a 2.6 percent decrease in the demand for your flowers
B) a 26 percent increase in the demand for your flowers
C) a 2.6 percent increase in the demand for your flowers
D) a 26 percent decrease in the demand for your flowers

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