When the price of a
percent, the quantity of
demanded decreases by
Calculate the cross elasticity of demand for
with respect to the price of a
Cross elasticity of demand measure the degree of responsiveness
of quantity demanded of one related good to a change in the price
of another related good.
Cross elasticity = %change in quantity demanded of one related good / %change in the price of another related good.
In the question,
% Increase in the price of skateboard is 4% and
% Decrease in the quantity demanded elbow pads is 1%
Cross Elasticity = -1% / 4%
Cross Elasticity = -0.25
As the cross elasticity is negative, the goods are complementary.
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