Let's use the simple form of the cross-price elasticity computation, shown to the right, to carry out a simple numerical example.

   Suppose the price of gasoline increases from $2.00 to $2.20 per gallon (don't mean to scare you) and suppose the quantity of new tires purchased falls (as a result) from 10,000 to 9,500 in the same city. What is the cross-price elasticity of demand for tires with respect to gasoline? In the formula Qx represents the quantity of tires, and Py the price of gasoline.

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