(a) Define the term "Cross Elasticity of Demand." 

(b) What does this measure tell you about the two goods involved? 

(c) Suppose that the price of oranges increases from 60 cents per pound to $1.25 per pound as a result of a frost in Florida. As a result, the market demand for apples increases from 5000 pounds to 8000 pounds. Calculate the cross elasticity of oranges with respect to apples.

(d) Are the two goods above substitutes or complements? Use your answer in part (C) to explain.

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a Cross Elasticity of Demand is the measure of the responsiveness sensitive of quantity demanded of ... View the full answer