If the quantity demanded of soda increases by 4% when the price of coffee increases by 16%,the cross-price elasticity of demand between soda and coffee is:
A)-0.25.
B)0.25.
C)-12.0.
D)12.0.

Question

Quizplus · Accepted Answer

The cross-price elasticity of demand is calculated as the percentage change in quantity demanded of one good divided by the percentage change in price of another good. Here, it is 4% / 16% = 0.25.

If the Quantity Demanded of Soda Increases by 4% When