When the price of smartphones falls by 20 percent, the demand for data plan rise

ID: 2505958 • Letter: W

Question

When the price of smartphones falls by 20 percent, the demand for data plan rises by 7 percent.

a. Calculate the cross-price elasticity of demand.

Instructions: Round your answer to 2 decimal places. If you are entering anynegativenumbers be sure to include a negative sign (-) in front of those numbers.

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b. Are the goods complements or substitutes: (Click to select) complements substitutes .

c. In the original scenario, what would have to happen to the demand for data plan for us to conclude that data plan and smartphones are substitutes?

The demand for data plans would have to decline. The demand for data plans would have to remain unchanged. The demand for data plans would have to rise When the price of smartphones falls by 20 percent, the demand for data plan rises by 7 percent. Calculate the cross-price elasticity of demand. Round your answer to 2 decimal places. If you are entering anynegativenumbers be sure to include a negative sign (-) in front of those numbers. Are the goods complements or substitutes: In the original scenario, what would have to happen to the demand for data plan for us to conclude that data plan and smartphones are substitutes? The demand for data plans would have to decline. The demand for data plans would have to remain unchanged. The demand for data plans would have to rise

Explanation / Answer

a) should be 7% / -20% = -.35

There's a mathematical error in answer above.

I agree with b) and c)

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When the price of smartphones falls by 20 percent, the demand for data plan rise

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