Economics · Elasticity of Demand
Product BB15 recently reduced its price by 5%, which increased its sales volume by 12.5%. This price change also caused a 2.5% decrease in the sales volume of product CC25, whose own price remained unchanged. Based on this information, evaluate the price elasticity of demand (PED) for BB15, the cross-price elasticity of demand (XED) between BB15 and CC25, and their economic relationship.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1PED = -2.5; XED = +0.5; BB15 and CC25 are substitutes✓
- 2PED = -2.5; XED = -0.5; BB15 and CC25 are complements
- 3PED = +2.5; XED = +0.5; BB15 and CC25 are complements
- 4PED = -0.4; XED = +2.0; BB15 and CC25 are substitutes
Correct answer
PED = -2.5; XED = +0.5; BB15 and CC25 are substitutes
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