Question

If the cross-price elasticity between two commodities is 1.5,

Answer 1

Answer:

As an example, if the quantity demanded for a product increases 15% in response to a 10% reduction in price, the price elasticity of demand would be 15% / 10% =1.5. If a small change in price is accompanied by a large change in quantity demanded, the product is said to be elastic (or sensitive to price changes).