Question

When the price of erasers increases from R1,50 to R2,50, the quantity demanded of pencils is unchanged. The cross elasticity of demand between erasers and pencils is _____because erasers and pencils ___

A. 0; are normal goods
B. 0,5; are complements
C. 0; are unrelated
D. 1; are substitutes

Answer 1

C. 0; are unrelated

Cross elasticity = percentage change in quantity demanded of pens ÷ percentage change in the price of of pencils

Cross elasticity = $\frac{0}{[250-150]}=0$