A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of soda demanded. What does this indicate?
a. Elasticity of demand for potato chips is 3.
b. Cross-price elasticity of demand for soda is -3.
c. Elasticity of demand for potato chips is 3.
d. Elasticity of demand for soda 3.
b. Cross-price elasticity of demand for soda is -3.
A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of soda demanded. It appears that cross-price elasticity of demand for soda is -3.
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What will be an ideal response?
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