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IgorLugansk [536]
3 years ago
5

At the current prices of goods X and Y, the quantity demanded of good X is 10 units, and the quantity demanded of good Y is 5 un

its. The cross-price elasticity of demand between goods X and Y is 0.6. A 10 percent increase in the price of good Y will result in _________.
Business
1 answer:
damaskus [11]3 years ago
8 0

Answer:

When the price of good y increases by 10% it will result in the quantity demanded of x to increase by (0.6*10) =6%. The current quantity demanded of good x is 10 so a 6% increase will mean the quantity demanded of x will be (1.06*10)= 10.6

Explanation:

The cross elasticity of goods x and y is 0.6, which means that a one percent increase in price of good y will increase the demand for good x by 0.6%, this means that x and y are substitute goods, as when the price of y increases people tend to buy more of x.

When the price of good y increases by 10% it will result in the quantity demanded of x to increase by (0.6*10) =6%. The current quantity demanded of good x is 10 so a 6% increase will mean the quantity demanded of x will be (1.06*10)= 10.6

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