If the percentage change in quantity demanded of Good B is 2% and the percentage change in the price of Good A is -10%, what is the cross-price elasticity of demand?
A) 0.20
B) -5
C) 1
D) 5
E) -0.20

Question

Quizplus · Accepted Answer

Cross-price elasticity of demand is calculated as the percentage change in quantity demanded of Good B divided by the percentage change in the price of Good A. Thus, it is 2% / -10% = -0.20.

If the Percentage Change in Quantity Demanded of Good B