# Question: cross elasticity of demand involves two goods cross elasticity of...

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Cross Elasticity of Demand (involves two goods)

Cross Elasticity of Demand formula: EC= Q2 - Q1/ (Q2 + Q1)/2 divided by P2 - P1/ (P2 + P1)/2 (remember that cross elasticity measures how a price change in one good effects demand for another good)

Solve the following problem: The price of the Toyota Camry rose from $25,000 to $30,000 each, and sales of the Honda Accord rose from 2 million to 3 million units. Provide your answer, and indicate if your number showed elasticity, unitary elasticity, or was inelastic.