Question

Raina consumes 100% more mechanical pencils when the price of felt-tip pens increases by 50%. for raina, pencils and pens are ________ and the cross-price elasticity of demand is ________.

Answer 1

Raina consumes 100% more mechanical pencils when the price of felt-tip pens increases by 50%. for Raina, pencils and pens are substitutes and the cross-price elasticity of demand is two. Cross-price elasticity is the percent change in quantity demand of x / % change in price of y.