Question

Suppose that the per-unit price of good X is fixed at $5. When the price of good Y equals $8, the quantity demanded of good X is 12. When the price of good Y rises to $10, the quantity demanded of good X falls to 10. The cross-price elasticity of demand for good X with respect to the price of good Y between these two points, calculated using the midpoint formula, equals O 0.82 O -0.82 O 1.22 0 -1.22

Answer 1

Answer
cross price elasticity of demand=(change in quantity/average quantity)/(change in price/average price)
Change in quantity=10-12=-2
average quantity=(10+12)/2=11
change in price=10-8=2
average price=(10+8)/2=9

cross price elasticity of demand=(-2/11)/(2/9)
=-0.818181818
=-0.82

option 2