If the cross- price elasticity of demand between fish and chicken is 2, then a 2% increase in the price of fish will result in:
A) a 4% increase in the quantity of chicken demanded
B) a 10% increase in the quantity of chicken demanded
C) a 20% decrease in the quantity of chicken demanded
D) a 1% increase in the quantity of chicken demanded

Question

Quizplus · Accepted Answer

Cross-price elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good. A cross-price elasticity of 2 means that a 1% increase in the price of fish leads to a 2% increase in the quantity of chicken demanded. Therefore, a 2% increase in the price of fish will result in a 4% increase in the quantity of chicken demanded.

If the Cross- Price Elasticity of Demand Between Fish and Chicken