= -0.2/0.1 = -2%It means if the price of the price of the one pdrt increases then the demand for another pdtdecreases it means this good are substitute goods.Change in price of the pdt 3. Then the change in demand isQ1 = 100-42-60+8.08+24= 30.08.
Calculating the Percentage Change in Quantity Demanded of Good 1
The formula used to calculate the percentage change in quantity demanded is:
[Q Demand (NEW) – Q Demand (OLD)]Q Demand (OLD)
= 30.08-30/30 = 0.026.
Calculating the Percentage Change in Price of Good 3
The formula used to calculate the percentage change in price is:
[Price (NEW) – Price (OLD)]Price (OLD)
= (4.04-4)/4 = 0.01Cross elasticity of demand=% change in demand of pdt 1/ % change in the price of pdt 3= 0.01/0.026 = 0.38 or 38%This means, if the price of one good increases, it increases the demand for another product. i.e they are complementary goods.