The Price of a Falls by 2 Percent, and the Quantity

question 48

Multiple Choice

The price of A falls by 2 percent, and the quantity demanded of A increases by 2 percent. Meanwhile, the quantity demanded of B increases by 2 percent too. We would conclude that

• A) demand for A is elastic, and A and B are substitutes.
• B) demand for A is elastic, and A and B are complements.
• C) demand for A is unit-elastic, and A and B are complements.
• D) demand for A is inelastic, and A and B are unrelated.

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