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When the price of erasers increases from $1.50 to $2.50, the quantity demanded of pencils is unchanged. The cross-price elasticity of demand between erasers and pencils is

User Boson
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Answer:

The cross elasticity of demand is zero

Step-by-step explanation:

Cross elasticity of demand measures the percentage change in the quantity demand of a product occasioned by a change in the price of another but related commodity.

If the the commodities are complements, the cross of elasticity of demand between them would be negative. his implies an increase(decrease) in the price of one would lead to a decrease(increase) in the demand of the other.

If the the commodities are substitutes, the cross elasticity of demand between them would be positive. This implies an increase(decrease) in the price of one would lead to a increase (decrease) in the quantity demand of the other.

Where the cross elasticity of demand is zero, this implies that the goods are not in any way related. This implies that a change in the price of one would produce no change in the quantity demand of the other.

User Jannat Arora
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