Sugar is priced at Rs 50 with 10 kg demanded. When the price of tea falls from Rs 30 to Rs 25 per kg, sugar consumption rises from 10 kg to 12 kg. The cross-price elasticity of sugar with respect to tea is:

1. Use $E_c = \dfrac{\Delta q_x}{\Delta p_y}\times\dfrac{p_y}{q_x}$ with $x=$ sugar, $y=$ tea. 2. Here $\Delta q_x = 12-10 = 2$, $\Delta p_y = 25-30 = -5$, original $p_y = 30$, $q_x = 10$. 3. Substitute: $E_c = \dfrac{2}{-5}\times\dfrac{30}{10} = -0.4\times3$. 4. This equals $-1.2$. The negative sign shows sugar and tea are complementary. _Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit I "Law of Demand and Elasticity of Demand", p.35_