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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 20 percent?
10%. By definition, the cross elasticity = % change in the quantity of good X / % change in the price of good Y = -2.
So for the quantity of good X to change by 20%, price of good Y has to change by 10%.
