Suppose That the Cross Elasticity of Demand for Product a and Product

question 53

Multiple Choice

Suppose that the cross elasticity of demand for Product A and Product B is -1.6 and the price of Product A decreased by 20 per cent.What will happen to the quantity demanded of Product B?

• A)It will increase by 3.2%.
• B)It will increase by 32%.
• C)It will decrease by 3.2%.
• D)It will decrease by 32%.
• E)The quantity will be unaffected but the price of Product B will increase by 32%.

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