-In the above table, the cross price elasticity of demand (using averages) for C with good A, when PA increases from $12 to $15, is approximately equal to
A) +1.03
B) +2.26.
C) +0.44.
D) -0.44.

Question

-In the above table, the cross price elasticity of demand (using averages) for C with good A, when PA increases from $12 to $15, is approximately equal to
A) +1.03 
B) +2.26. 
C) +0.44. 
D) -0.44.

Quizplus · Accepted Answer

The cross price elasticity of demand formula is (% change in quantity demanded of Good C / % change in price of Good A). Given that the question specifies using averages and the increase in price from $12 to $15, we calculate the percentage change in price of Good A and the percentage change in quantity demanded of Good C. Without specific quantities, we can't calculate exact values, but the correct answer would involve recognizing the formula and understanding that a positive value indicates substitute goods and a negative value indicates complementary goods. The value of +0.44 suggests a relatively inelastic response of Good C's demand to the price change in Good A, indicating they are substitutes but not closely so.

-In the Above Table, the Cross Price Elasticity of Demand