Question

If Good C increases in price by 50 % a pound, and this causes the quantity demanded for Good D to increase by 60 % , what is the cross-price elasticity of the two goods? Round your answer to one decimal place.

Answer 1

Answer:

1.2

Explanation:

Cross price elasticity of demand measures the responsiveness of quantity demanded of good D to changes in price of good C.

Cross price elasticity = percentage change in quantity demanded of good D / percentage change in price of good C = 60% / 50% = 1.2

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