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JAMB Economics 1984 Question 16

Question 16

Elasticity

If X and Y are two goods, then the cross elasticity of demand for X with respect to Y is defined as the

  1. A.percentage change in the quantity of X divided by the percentage change in the price of Y
  2. B.percentage change in the quantity of X divided by change in the price of Y
  3. C.change in the quantity of X divided by change in the price of Y
  4. D.percentage change in the quantity of X divided by the price of Y
  5. E.percentage change in the price of X divided by percentage change in the quantity of Y.
Show the answer and explanation

Answer: A (percentage change in the quantity of X divided by the percentage change in the price of Y)

Explanation

Cross elasticity compares the percentage change in quantity demanded of one good with the percentage change in the price of the other.