Question

Cross elasticity of demand can be mathematically expressed as the

A \(\frac{\text{% change in quantity of commodity X}}{\text{% change in quantity of commodity Y}}\)
B \(\frac{\text{% change in quantity demanded}}{\text{% change in price}}\)
C \(\frac{\text{% change in quantity demanded of commodity X}}{\text{% change in price of commodity Y}}\)
D \(\frac{\text{% change in quantity demanded}}{\text{% change in income}}\)

Answer 1

The correct answer is C. \(\frac{\text{% change in quantity demanded of commodity X}}{\text{% change in price of commodity Y}}\)

Cross elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good.

It is calculated as the percentage change in the quantity demanded of good X divided by the percentage change in the price of good Y.

The formula for cross elasticity of demand is:

Cross elasticity of demand = \(\frac{\text{% change in quantity demanded of commodity X}}{\text{% change in price of commodity Y}}\)