14. Substitutes, complements, or unrelated? Aa Aa Data collected in the imaginar

Question

14. Substitutes, complements, or unrelated? Aa Aa Data collected in the imaginary economy of Perturbia reveals that when the price of drof increased by 10%, the quantity of drof sold decreased by 20%, and the quantity of vot demanded increased by 5%. What is the cross-price elasticity of demand between vort and drof? O 0.5 O -2 O -0.5 Which of the following can you conclude based on this information? Check all that apply. The demand for vort is price elastic in this price range. The demand for drof is price inelastic in this price range. Drof and vort are unrelated. Drof and vort are substitutes.

Explanation / Answer

Cross price elasticity of demand = % change in quantity demanded of vort / % change in price of drof

                                                           = 5/10 = 0.5

Drof and vort are substitutes.

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