Suppose that the number of units of good A consumed falls 12 percent when the price of good B falls 8 percent. The cross price elasticity of demand between goods A and B is
A) 0.66.
B) 1.75.
C) 2.0.
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 (-12% / -8%) = 1.5.

Suppose That the Number of Units of Good a Consumed