If a 20% rise in price of Whiskey leads to a 30% increase in quantity...

WAEC 2011

If a 20% rise in price of Whiskey leads to a 30% increase in quantity demanded of Schnapps, the cross elasticity of demand is

A. 3.0
B. 2.5
C. 2.3
D. 1.5

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Correct Answer: Option D

Explanation

It is calculated by taking the percentage change in the quantity demanded of one good and dividing it by the percentage change in the price of the other good.

Hence we; 30/20 = 1.5

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If a 20% rise in price of Whiskey leads to a 30% increase in quantity...

Correct Answer: Option D

Explanation

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