Suppose the original quantity demanded for good R is 20 units and the new quantity demanded for R is 10 units

• The right answer choice is: B. 2.33.

Using the mid-point formula, we will calculate the cross-price elasticity of demand between good R and TR and T as:

ER,T=ΔQRΔPTׯPT¯QRER,T=ΔQRΔPT×P¯TQ¯R

where:

• ¯PTP¯T is the average change in the price of good TT and,

• ¯QRQ¯R is the average change in the price of good RR.

From the information in our question, we can deduce the following table.

Therefore:

ΔQR=10−20=−10ΔPT=6−8=−$2¯PT=8+62=$7¯QR=10+202=15ΔQR=10−20=−10ΔPT=6−8=−$2PT¯=8+62=$7QR¯=10+202=15

Thus, the cross-price elasticity of demand is:

ER,T=−10−2×715ER,T≈2.333