Suppose nationwide increases the insurance premium they charge for their auto policies by 16 percent. in response, the demand for state farm auto policies in a small town increases from 3 comma 500 to 4 comma 025. what is the cross-price elasticity of demand for state farm auto policies in this town?

CPE= 15%/16%= 0,9375

Explanation:

The cross-price elasticity measures how the quantity demanded of good A changes when the price of good B changes by 1%.

The cross-price elasticity (CPE) formula is:

CPE= Δ%q of good A/ Δ%p of good B

good A: state farm auto policies

good B: insurance premium for auto policies

- Percentage change in the quantity demanded for good A:

%Change in quantity demanded= (q2-q1/q1)*100 = (4,025-3,500)/3,500= 0,15*100= 15%

- Percentage change in the price for good B: 16%

-CPE= 15%/16%= 0,9375

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know