Pete feeds his dog 100 percent more Pup-Peronis when Zuke's treats increase in price by 50 percent.For Pete,Pup-Peronis and Zuke's are ________ and the cross-price elasticity of demand is ________.
A) complements; -1/2
B) substitutes; 2
C) substitutes; -2
D) complements; 2
E) substitutes; 1/2

Question

Quizplus · Accepted Answer

Substitutes; 2. The increase in price of Zuke's treats leads Pete to buy more Pup-Peronis, indicating they are substitutes. The cross-price elasticity of demand is calculated as the percentage change in quantity demanded of one good divided by the percentage change in price of another good. Here, it's (100%/50%) = 2.

Pete Feeds His Dog 100 Percent More Pup-Peronis When Zuke's