question archive How would you measure the effect of the ice cream price on chocolate syrup sales? a
How would you measure the effect of the ice cream price on chocolate syrup sales? a
Subject:EconomicsPrice:2.88 Bought3
How would you measure the effect of the ice cream price on chocolate syrup sales?
a. Since chocolate syrup and ice cream are complements, one would measure this effect using the price elasticity of demand for syrup.
b. Since chocolate syrup and ice cream are substitutes, one would measure this effect using the price elasticity of demand for syrup.
c. Since chocolate syrup and ice cream are complements, one would measure this effect using the cross elasticity.
d. Since chocolate syrup and ice cream are substitutes, one would measure this effect using the cross elasticity.
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Options b) and d) are incorrect since chocolate syrup and ice cream are not substitutes. Option a is incorrect since the situation mentioned in the question relates to the concept of cross elasticity of demand and not price elasticity.
The correct answer is Option c) because chocolate syrup complements ice cream; its demand will change in response to a change in the price of ice cream.
