-Refer to the above table. Suppose the price of X increases from $10 to $12. What is the cross price elasticity of demand between X and Z?
A) +0.292
B) +7.06
C) -7.06
D) -0.292

Question

-Refer to the above table. Suppose the price of X increases from $10 to $12. What is the cross price elasticity of demand between X and Z?
A) +0.292 
B) +7.06 
C) -7.06 
D) -0.292

Quizplus · Accepted Answer

Cross price elasticity of demand is calculated as the percentage change in quantity demanded of one good divided by the percentage change in price of another good. If the quantity demanded of Z increases as the price of X increases, the cross price elasticity is positive, indicating that X and Z are substitutes.

-Refer to the Above Table