If the price of apples went down by 20 percent, which of the following values of the cross price elasticity for boats would be most reasonable to anticipate?
A) 0.0
B) 2.0
C) -2.0
D) -20

Question

Quizplus · Accepted Answer

Cross price elasticity measures the responsiveness of the demand for one good to a change in the price of another good. Since apples and boats are unrelated goods, a change in the price of apples is unlikely to affect the demand for boats, implying a cross price elasticity close to 0.0.

If the Price of Apples Went Down by 20 Percent