JAMB Economics 2018 Objective — Question 38

Question 38 of 40 from the Joint Admissions and Matriculation Board (JAMB) Economics 2018 Objective paper, with the correct answer and a full explanation.

The price of a commodity X increases from 2.00 to 7.00, while the quantity demanded of a related commodity Y decreases from 75 to 50. Calculate the cross elasticity of demand

A. 15/2
B. 2/15Correct
C. 1/15
D. 15/1

Explanation

%ΔQy = (75−50)/[(75+50)/2] ×100 ≈ 33.3%. %ΔPx = (7−2)/[(7+2)/2] ×100 ≈111%. Cross elasticity = %ΔQy/%ΔPx = 2/15 (as computed using the midpoint/average method shown in the working).

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