Use the Figure Below to Calculate the Cross-Price Elasticity of Demand

question 13

Multiple Choice

Use the figure below to calculate the cross-price elasticity of demand for good X when the price of good Y increases from $12 to $14:

• A)0.64
• B)0.42
• C)0.20
• D)2.00
• E)15.38

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Definitions:

Regulatory Commission

A government agency responsible for controlling and supervising specific industries to enforce standards and laws for public safety and welfare.

Natural Monopolist

A single supplier that can serve the entire market at a lower cost than two or more competing suppliers.

Maximum Price

A price ceiling set by the government to prevent prices from soaring to levels that are too high for most consumers to afford.

Profit-maximizing Level

The output level at which a firm achieves the highest profit, where marginal cost equals marginal revenue.