Answer to Question #200091 in Macroeconomics for tanya

Question

. Merchandise sales also increased after food prices fell. Is the cross-price elasticity of demand between food and merchandise positive or negative? 

Answer 1

Following the fall in meal costs at consession stalls, merchandise sales also increased. This suggests that the price of stadium food and the demand for items have a negative cross price elasticity. As the price of food decreases, so does the demand for food, as well as the demand for commerce. This means that in this case, food and merchandise are complementary items.