If the cross-price elasticity between ketchup and hamburgers is -1.2, a 4% increase in the price of ketchup will lead to a 4.8%:
A)drop in quantity demanded of ketchup.
B)drop in quantity demanded of hamburgers.
C)increase in quantity demanded of ketchup.
D)increase in quantity demanded of hamburgers.

Question

Quizplus · Accepted Answer

The cross-price elasticity of -1.2 indicates that ketchup and hamburgers are complements. A 4% increase in the price of ketchup will lead to a 4.8% decrease in the quantity demanded of hamburgers.

If the Cross-Price Elasticity Between Ketchup and Hamburgers Is -1