If the quantity of glazed donuts demanded increases by 6% when the price of cinnamon rolls increases by 9%, the cross-price elasticity of demand between glazed donuts and cinnamon rolls is
A) -1.5.
B) -0.33.
C) 0.67.
D) 1.5.

Question

Quizplus · Accepted Answer

The cross-price elasticity of demand is calculated as the percentage change in the quantity demanded of one good divided by the percentage change in the price of another good. Here, it is (6% / 9%) = 0.67, indicating that glazed donuts and cinnamon rolls are substitutes.

If the Quantity of Glazed Donuts Demanded Increases by 6