Question

run-of-the-mills provides your marketing firm with the following data: when the price of penguin pops decreases by 4%, the quantity of flopsicles sold decreases by 12% and the quantity of kipples sold increases by 12%. your job is to use the cross-price elasticity between penguin pops and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the cross-price elasticity between penguin patties and flopsicles, and then between penguin patties and kipples. In the second column, determine if penguin patties are a complement to or a substitute for each of the goods listed. Finally, complete the final column by indicating which good you should recommend marketing with penguin patties.Relative to Penguin PattiesCross-Price Elasticity of Demand Complement or Substitute Recommend Marketing with Penguin PattiesFlopsiclesKipples

Answer 1

Answer: -12%

Step-by-step explanation:

The cross-price elasticity between penguin patties and flopsicles is -12%, indicating that they are substitutes. The cross-price elasticity between penguin patties and kipples is 12%, indicating that they are complements. Therefore, the marketing firm should recommend marketing kipples with penguin patties, as they are complements and will see an increase in demand when one is purchased.