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Homework answers / question archive / Suppose the cross-price elasticity of demand between goods X and Y is 2
Suppose the cross-price elasticity of demand between goods X and Y is 2. How much would the price of good Y have to change in order to change the consumption of good X by 50 percent?
If the cross price elasticity is 2
then: 2 = 50 / Y
Y = 50 / 2 = 25
This means that price of good Y would have to increase by 25% to change the consumption of good X by 50 percent
