-Refer to the above table. Suppose the price of B rises from $18 to $20. What is the cross price elasticity of demand between A and B?
A) -2
B) -1
C) 0
D) +1

Question

-Refer to the above table. Suppose the price of B rises from $18 to $20. What is the cross price elasticity of demand between A and B?
A) -2 
B) -1 
C) 0 
D) +1

Quizplus · Accepted Answer

The cross price elasticity of demand measures the responsiveness of the quantity demanded for a good to a change in the price of another good. A positive cross price elasticity indicates that the goods are substitutes, meaning if the price of one good increases, the demand for the other good increases as well. Since the question implies a relationship but doesn't provide specific quantities, the correct answer is inferred to be positive, indicating substitutability, but without specific data, the exact numerical value cannot be determined. Thus, +1 (D) is chosen to reflect a positive relationship.

-Refer to the Above Table