Question 1
(a) Define cross elasticity of demand.
(b) The table below shows the response of quantity demanded to changes in price for three pairs of commodities.
Use the table to answer the questions that follow.
| Commodity | changes in price | commodity | Changes in Quantity Demanded | ||
| Original Price ( |
New price ( |
Original Quantity (kg) | New Quantity (kg) | ||
| Bread | 15 | 20 | Yam | 150 | 200 |
| Beef | 25 | 40 | Fish | 1,000 | 3,000 |
| Butter | 100 | 50 | Margarine | 250 | 400 |
Theory