Question on: JAMB Economics - 1994
Cross elasticity of demand can be mathematically expressed as the
A
\(\frac{\text{% change in quantity of commodity X}}{\text{% change in quantity of commodity Y}}\)
B
\(\frac{\text{% change in quantity demanded}}{\text{% change in price}}\)
C
\(\frac{\text{% change in quantity demanded of commodity X}}{\text{% change in price of commodity Y}}\)
D
\(\frac{\text{% change in quantity demanded}}{\text{% change in income}}\)
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Correct Option: C
Cross elasticity of demand measures the responsiveness of the quantity demanded of one good (X) to a change in the price of another good (Y). The formula reflects this relationship:
- The numerator represents the percentage change in the quantity demanded of good X.
- The denominator represents the percentage change in the price of good Y.
Therefore, the correct mathematical expression is: \(\frac{\text{% change in quantity demanded of commodity X}}{\text{% change in price of commodity Y}}\)
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