If the quantity of pretzels demanded decreases by 8% when the price of beer increases by 6%, the cross-price elasticity of demand between pretzels and beer is
A) -14.
B) -1.33.
C) -0.75.
D) 2.

Question

Quizplus · Accepted Answer

The cross-price elasticity of demand is calculated as the percentage change in the quantity demanded of one good divided by the percentage change in the price of another good. Here, it is (-8% / 6%) = -1.33, indicating that pretzels and beer are complements since the cross-price elasticity is negative.

If the Quantity of Pretzels Demanded Decreases by 8% When