XED quiz

Which of the following best describes what cross elasticity of demand measures?

• The responsiveness of demand for a good after a change in the price of another good

• How aware producers are of a change in price

• How responsive buyers are to a change in the price of a good

• The change in demand for a good after a change in income

What is the formula for calculating Cross Elasticity of Demand (XED)?

• % change in quantity demanded of good X / % change in price of good Y

• % change in price / % change in quantity demanded

• % change in quantity demanded / % change in price

• % change in quantity demanded / % change in income

The price of Pepsi increases from 50p to 60p per can at a supermarket, causing demand for Coca Cola to rise from 1m to 2m cans per year. Calculate the XED:

• 2

• 3

• 4

• 5

The price of cinema tickets increases from £5.00 to £7.50, and the demand for popcorn decreases from 1,000 tubs to 700. Calculate the XED:

• -0.4

• -0.5

• -0.6

• -0.7

An increase in the price of tea by 10% sees the quantity demanded for coffee increase by 2%. Calculate the XED:

• 0.1

• 0.2

• 1

• 2

The price of peanut butter increases from £3 to £3.50 per jar, causing the quantity of jam demanded to fall from 30 jars to 24 jars. Calculate the XED:

• -1

• -1.2

• -1.4

• -1.6

A butcher sells pork and lamb only. When the price of pork rises by 15% the demand for lamb increases by 10%. Calculate the XED:

• 0.27

• 0.47

• 0.67

• 0.87

Goods that have a positive XED are:

• Complements

• Substitutes

What is the relationship between these goods?

• Substitutes

• Complementary goods

Goods that have a negative XED are:

• Complements

• Substitutes