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andrey2020
1 month ago
14

When the price of erasers increases from $1.50 to $2.50, the quantity demanded of pencils is unchanged. The cross-price elastici

ty of demand between erasers and pencils is ________ because erasers and pencils are ________.a. 1; substitutesb. 1/2; complementsc. 0; normal goodsd. 0; unrelatede. −1/2; complements
Business
1 answer:
marusya05 [3K]1 month ago
3 0

Answer: c. 0; unrelated.

Explanation:

Cross elasticity of demand indicates how demand for a specific product responds to price changes of another product.

A price adjustment in one product may cause a shift in demand for another if they are substitutes or complementary goods. Conversely, if two products are unrelated, a price fluctuation in one will not affect the demand for the other.

In this scenario, the cross elasticity is zero since a biro and a pencil are not associated.

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