Tennis balls and tennis rackets are complements.If a 3 percent change in the price of a tennis racket leads to a 9 change in the quantity of tennis balls demanded,the cross elasticity of demand equals
A) 3.
B) -3.
C) 1/3.
D) -1/3.
E) 9.

Question

Quizplus · Accepted Answer

The cross 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 (9% / 3%) = 3. Since tennis balls and tennis rackets are complements, the cross elasticity of demand is negative, making the correct answer -3.

Tennis Balls and Tennis Rackets Are Complements