Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / The quantity demanded of good A increases by 10% when the price of good B rises by 5%, other things remaining the same

The quantity demanded of good A increases by 10% when the price of good B rises by 5%, other things remaining the same

Marketing

The quantity demanded of good A increases by 10% when the price of good B rises by 5%, other things remaining the same. What is the cross elasticity of demand of good A with respect to good B?

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

Cross Elasticity = Percentage change in Quantity demanded of the other good/ Percentage change in price of the given good

 

Percentage change in quantity demanded of Good A = 10%

Percentage change in price of Good B = 5%

Putting the above values in the cross elasticity formula we have,

Cross Elasticity = 10%/ 5%

Cross Elasticity = 2

Hence the cross elasticity of good A with respect to good B is 2.