The cross elasticity of demand for good X with respect to the price of good Y is – 3, the price of good If Y increases by 2%, how does quantity demanded change?
describe how to do it

-6%

Explanation:

The Cross price elasticity of demand shows the change in the quantity demanded of one good as a result of the change in price of another good.

Negative cross elasticity means that both goods are complimentary in that an increase in price in one leads to a decrease in quantity demanded in the other good. The reverse holds true

Cross price elasticity = Percent change in quantity demanded of good X / Percent change in price of good Y

-3 = Percent change in quantity demanded of good X / 2%

Percent change in quantity demanded of good X = -3 * 2%

= -6%

Quantity demanded of good X decreased by 6%.

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