5 Questions
If the price of Good Y remains constant, what will be the new level of demand for Good Y when the price of Good X rises to 25 pence?
80 units
What is the meaning of a cross elasticity of demand of -1 between Good Y and Good X?
Perfectly inelastic relationship
If the cross elasticity of demand was positive instead of negative, what would be the effect on the demand for Good Y?
Increase in demand
What happens to demand for Good Y if the price of Good X decreases to 15 pence?
Increases
If the cross elasticity of demand between Good Y and Good X was -0.5, what would be the impact on the demand for Good Y when the price of Good X increases?
Increases slightly
Test your knowledge of cross elasticity of demand by calculating the new level of demand for Good Y when the price of Good X changes. In this scenario, the cross elasticity of demand with respect to Good X is -1 and the initial demand for Good Y is given.
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