Price inelastic demand?

Peter always spends exactly $20 on pies and sauce. The two are complements for him. If the price of sauce rises, then : (a) After the price rise he will spend more money on pies than before. (b) After the price rise he will spend less money on sauce than before. (c) Demand for sauce must be price... show more Peter always spends exactly $20 on pies and sauce. The two are complements for him.
If the price of sauce rises, then :


(a) After the price rise he will spend more money on pies than before.
(b) After the price rise he will spend less money on sauce than before.
(c) Demand for sauce must be price inelastic.
(d) Demand for sauce must be price elastic.


What is the answer? Why?
Update: You're both wrong. The answer is C. Why?
3 answers 3