The percentage change in the quantity of bread demanded divided by the percentage change in price of jelly measures
A) the cross-price elasticity of demand for bread with respect to jelly.
B) the cross-price elasticity of demand for jelly with respect to bread.
C) the price elasticity of demand for bread.
D) the price elasticity of demand for jelly.

Question

Quizplus · Accepted Answer

The percentage change in the quantity of bread demanded divided by the percentage change in price of jelly measures the responsiveness of the quantity demanded of bread to a change in the price of jelly, which is the definition of cross-price elasticity of demand. Therefore, the answer is A. It is not C or D because the question is asking about the relationship between bread and jelly, not just the responsiveness of demand for one good to a change in its own price. It is also not B because the question is asking about the demand for jelly with respect to bread, but the formula given is measuring the demand for bread with respect to jelly.

The Percentage Change in the Quantity of Bread Demanded Divided