If the cross-price elasticity between Good A and Good B is -1.5 and the percentage change in quantity demanded of Good B is 15%, what is the percentage change in the price of Good A?
A) -10%
B) -0.10%
C) -11.50%
D) -1%
E) 11.50%

Question

Quizplus · Accepted Answer

The cross-price elasticity formula is: % change in quantity demanded of Good B / % change in price of Good A = -1.5. Solving for % change in price of Good A gives: 15% / -1.5 = -10%.

If the Cross-Price Elasticity Between Good a and Good B