Answer to Question #17486 in Microeconomics for SON

Question

5 When the price of good X falls from
10 to
9, the demand for good Y
increased from 20 Kg. to 25 Kg.
a) What is the cross elasticity of demand of good Y for good X?
b) Are Goods X and Y compliments or substitutes?

Answer 1

Price falls on 10%
Quantity increases on 25%
Cross Elasticity is 2.5 25%/10%
According to value of cross elasticity we can say that Goods XX and Y are compliments