Use the information below to answer the question that follows.
When commodity X sold for N25 per unit, 50 units of commodity Y were purchased. With an increase in the price of commodity X to N50 per unit, the demand for commodity Y fell to 20 units.
Determined the cross elasticity of demand?
Cross elasticity of demand shows the way that the changes in the price of one good can affect the quantity demanded of another good.
CED = \(\frac{\text { % change in demand of product Y} }{\text { % change of price of product X}}\)
% ∆ demand of y = 50 - \(\frac{25}{25}\) × 100
= \(\frac{25}{25}\) × 100 = 100
% ∆ price of x = 20 - \(\frac{50}{50}\) × 100
= - \(\frac{30}{50}\) × 100 = - 60
CED = \(\frac{\text {% ∆ demand of y}}{\text {%∆ price of x}}\)
= - \(\frac{-60}{100}\)
= - 0.6
Contributions ({{ comment_count }})
Please wait...
Modal title
Report
Block User
{{ feedback_modal_data.title }}