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 2 percent, you should expect which of the following?
A) a 5.2 percent decrease in the demand for your flowers
B) a 5.2 percent increase in the demand for your flowers
C) a 0.77 percent decrease in the demand for your flowers
D) a 0.77 percent increase in the demand for your flowers
Correct Answer:
Verified
Correct Answer:
Verified
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