When the price of erasers increases from $1.50 to $2.50, the quantity demanded of pencils is unchanged. The cross-price elasticity of demand between erasers and pencils is because erasers and pencils .
A) 1; are substitutes
B) ½; are complements
C) 0; are normal goods
D) 0; are unrelated
E) -½; are complements

Question

Quizplus · Accepted Answer

Since the price increase in erasers did not affect the demand for pencils, it means that erasers and pencils are unrelated. Thus, the cross-price elasticity of demand between erasers and pencils is 0.

When the Price of Erasers Increases from $1