A cross price elasticity of demand for product with respect to the price of product of 0.3 means that an increase in the price of A by 10 percent gives rise to a decrease in the quantity demanded of B by 3 percent.

Question

Quizplus · Accepted Answer

A cross price elasticity of 0.3 indicates that a 10% increase in the price of product A would lead to a 3% increase, not decrease, in the quantity demanded of product B, suggesting they are substitute goods.

A Cross Price Elasticity of Demand for Product with Respect