Question

Suppose the price of pepperpepper increases by 1010 percent​ and, as a​ result, the quantity of saltsalt demanded​ (holding the price of saltsalt ​constant) increasesincreases by 55 percent. the​ cross-price elasticity of demand between pepperpepper and saltsalt is nothing. ​(enter your response rounded to two decimal places and include a minus sign if​ appropriate.) in this​ example, pepperpepper and saltsalt are ▼ substitutessubstitutes complementscomplements not relatednot related . ​instead, suppose pepperpepper and saltsalt were complementscomplements. if​ so, then the​ cross-price elasticity of demand between pepperpepper and saltsalt would be

Answer 1

The cross-price elasticity of demand between salt and pepper is -0.50 In this example salt and pepper are Complements. Instead, suppose salt and pepper were substitutes. If so, the the cross-price elasticity of demand between salt and peeper would be positive.