The formula for cross elasticity of demand is percentagechange in a. quantity de

Question

The formula for cross elasticity of demand is percentagechange in a. quantity demanded of X/percentage change in price ofX b.quantity demanded of X/ percentage change inincome c. quatity demanded of X/ percentage change in price ofY d. price of X/percentage change in quantity demanded ofY The formula for cross elasticity of demand is percentagechange in a. quantity demanded of X/percentage change in price ofX b.quantity demanded of X/ percentage change inincome c. quatity demanded of X/ percentage change in price ofY d. price of X/percentage change in quantity demanded ofY d. price of X/percentage change in quantity demanded ofY

Explanation / Answer

c. quantity demanded of X/percentage change in price ofY i.e. Let the equation for quantity demanded of product Xbe Qdx = + 1Px +2Py Then the cross price elasticity would be y =2.(Py/Qdx) Note: If the equation is solved for Px, then it would be y =1/2.(Py/Qdx) y =1/2.(Py/Qdx) I hope it helps -Paulo

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