B
Cross-price elasticity of demand =
Percentage change in quantity demanded of good 1 / Percentage change in the price of good 2
I did the work and that's what I got.
Sandra purchases 5 pounds of coffee and 10 gallons of milk per month when the price of coffee is $10 per pound. She purchases 6 pounds of coffee and 12 gallons of milk per month when the price of coffee is $8 per pound. Sandra’s cross-price elasticity of demand for coffee and milk is
A. 0.82, and they are substitutes.
B. -0.82, and they are complements.
C. 1.22, and they are substitutes.
D. -1.22, and they are complements.
2 answers
-0.82, and they are complements.