Anonymous
Anonymous asked in Social ScienceEconomics · 8 years ago

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 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

Relevance
  • 8 years ago
    Best Answer

    d) Demand for sauce must be price elastic.

    In view of balanced diet and his budget. Covered by linear programming.

  • zula
    Lv 4
    3 years ago

    What the time period method is that for every alternate in fee, the exchange renowned is smaller in share. Analysing the quandary, I believe that a just right harvest manner supply increases, for this reason costs scale back. Technically, this must entail higher demand. Nevertheless, the inelasticity of agricultural items factors demand to simply broaden by way of a little bit, gains decline and the earnings of farmers suffers as well. Incomes in different sectors should increase on the grounds that agricultural items are now more cost effective.

  • Anonymous
    8 years ago

    B. It's a law of demand. A is not right he will consume less pies. WE don't know about c and d,but not relevant.

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