Scenario 5-1 Suppose That When the Average College Student's Income Is $10,000

Scenario 5-1
Suppose that when the average college student's income is $10,000 per year, the annual quantity demanded of Patty's Pizza is 50 and the annual quantity demanded of Sue's Subs is 80. Suppose that when the price of Patty's Pizza increases from $8 to $10 per pie, the quantity demanded of Sue's Subs increases from 80 to 100. Suppose also that when the average student's income increases to $12,000 per year, the annual quantity demanded of Patty's Pizza increases from 50 to 60.
-Refer to Scenario 5-1. Using the midpoint method, the cross price elasticity of demand is

A) about 0.22, and the two goods are substitutes.
B) about -0.005, and the two goods are complements.
C) 1, and the two goods are substitutes.
D) 1, and the two goods are unitary elastid.

Correct Answer:

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