If the price of a good increases by 20% and the quantity demanded of its complement falls by 18%, the cross-price elasticity for the two goods is _____.
A) 1
B) 0.9
C) 1.1
D) 2

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 (−18%)/(20%) = −0.9, indicating that the goods are complements, as shown by the negative sign.

If the Price of a Good Increases by 20% and the Quantity