Suppose nationwide increases the insurance premium they charge for their auto policies by 18 percent. in response, the demand for state farm auto policies in a small town increases from 6,000 to 7,500. what is the cross-price elasticity of demand for state farm auto policies in this town?

a. using the midpoint formula, the cross-price elasticity of demand for state farm auto policies is:
b. in this instance, auto insurance from nationwide and auto insurance from state farm are

Solution:

Cross-price elasticity of demand is given

Ec = (% Change in Quantity Demanded of good / % Change in Price of good)

A Greek letter "DELTA," which indicates the symbol Delta, suggests the change in the price and quantity demanded from the basic quantify or price.

% Change in Quantity Demanded in units = [ (6,900 - 6,000) / 6,000] * 100

                                                                        = (900 / 6,000) * 100                                                      

                                                                        = 15%

% Change in Price = [ (1.08x- x) / x] * 100

                                = (0.08 / 1) * 100

                                = 8%

Price has been denoted as x and 1.08x respectively, as no indication is available on what the actual price was; only information of how much it increased by is available to us.

Cross-Price Elasticity of Demand (Ec) equals (15% / 8%) = 1.875

Therefore, the cross-price elasticity of demand of State Farm Auto Policies is 1.875

being suspected of supplying drugs means you are much more likely to be charged. the amount of drugs found on you, and whether you have a criminal record, will be taken into account when a punishment is being decided.

decisions to prosecute are taken by the public prosecution service. the maximum sentences for intent to supply drugs are: