When the Price of Tortilla Chips Rose by 10 Percent

question 74

Multiple Choice

When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent, and the sale of dips (like salsa and bean dip) fell 8 percent. This set of facts indicates that

• A) the cross-price elasticity between tortilla chips and dips is 0.8, so the two are substitutes.
• B) the cross-price elasticity between tortilla chips and dips is -0.4, so the two are complements.
• C) the cross-price elasticity between tortilla chips and dips is -0.8, so the two are complements.
• D) the cross-price elasticity between tortilla chips and dips is 0.4, so the two are substitutes.

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