Question

2. The cross-price elasticity of demand between goods J and K is -3. A 20 percent decrease in the price of good K will result in a
A. 3 percent decrease in the quantity demanded of good K
B. 15 percent decrease in the quantity demanded of good K
C. 6 percent increase in the quantity demanded of good J
D. 12 percent increase in the quantity demanded of good J
E. 60 percent increase in the quantity demanded of good J

Answer 1

The cross-price elasticity of demand between goods J and K is -3. A 20 percent decrease in the price of good K will result in a 60 percent increase in the quantity demanded of good J.

Cross-price elasticity measures how sensitive the call for a product is over a shift of a corresponding product rate. regularly, within the marketplace, a few items can relate to each other. this can mean a product's charge increase or lower can positively or negatively have an effect on the alternative product's call.

Unlike the constantly terrible rate elasticity of call for, the price of the go rate elasticity can be either bad or fantastic, and the signal gives vital records approximately whether or not the goods are complements and substitutes.

Move elasticity of demand lets companies apprehend the market better. In flip, it lets them to determine the rate to be attached to their products.

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