According to a Honda press release on October 23, 2006
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According to a Honda press release on October 23, 2006

According to a Honda press release on October 23, 2006, sales of the fuel - efficient four - cylinder Honda Civic rose by 7.1% from 2005 to 2006. Over the same period, according to data from the U.S. Energy Information Administration, the average price of regular gasoline rose from $2.27 per gallon to $2.57 per gallon.

Using the midpoint method, calculate the cross - price elasticity of demand between Honda Civics and regular gasoline. According to your estimate of the cross - price elasticity, are the two goods complements or substitutes? Does your answer make sense?

Hint
Accounts & FinanceComplements are goods that are can be consumed together. The consumption of good A requires the consumption of good B. Substitutes refers to goods that can replace the consumption of another good. This is where consuming more of good A replaces the consumption of good B....

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