Answer:
Cross price elasticity using midpoint method = 0.56
Step-by-step explanation:
Using the mid-point method
Cross-price Elasticity of Demand = % change in Quantity demanded of UPS
% change of price of FedEx
%change in Quantity demanded of UPS
using Mid-point method = Q2-Q1 × 100
(Q1+Q2)÷ 2
= 1.3-1.2 × 100
(1.2+1.3)÷2
= 0.1 × 100
1.25
= 8%
% change in price of FedEx
using midpoint method = P2-P1 × 100
(P1+P2)÷ 2
= 75-65 × 100
(65+75)÷2
= 10 × 100
70
= 14.28%
Cross-price Elasticity of Demand = 8% ÷ 14.28%
using midpoint method = 0.56
