If the price of cereal increases by 10 percent and the amount of milk demanded decreases by 2 percent,then the cross-price elasticity of these goods is:
A) 5.
B) 5
C) 0.2.
D) 0.2

Question

Quizplus · Accepted Answer

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 -2% / 10% = -0.2.

If the Price of Cereal Increases by 10 Percent and the Amount