Good X and Good Y are related goods. When the price of Good X rises by 5 percent, the quantity demanded for Good Y rises by 15 percent. Calculate the cross-price elasticity.
A) 3
B) -3
C) -0.3
D) 0.3

Question

Quizplus · Accepted Answer

Cross-price elasticity of demand is calculated as the percentage change in quantity demanded of Good Y divided by the percentage change in price of Good X. Here, it is 15% / 5% = 3.

Good X and Good Y Are Related Goods