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Syesha loves to eat Sunday breakfast at her local Scrambles restaurant. She usually orders a la carte. Her usual breakfast consists of 2 scrambled eggs, 1 piece of bacon and 2 links of sausage. The price of an egg, a sausage link and a piece of bacon are all $1. Thus her breakfast has a price of $5.
Scramble restaurant changes the price of eggs to $1.50. She now orders the following for her breakfast:
1 scrambled egg, 2 pieces of bacon and 1 sausage link.
i) Calculate the cross price elasticity of eggs and sausage.
ii) What type of relationship is there between eggs and sausage?
iii) Calculate the cross price elasticity of eggs and bacon?
iv) What type of relationship is there between eggs and bacon?
One of our clients is a major homebuilder in the Midwest. This company believes that sales of their new homes are highly correlated with business cycles in the overall US economy.
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