Consider the market for . Suppose the price of increases from $ to $ per . As a result, the demand for decreases from to . Using the midpoint formula, what is the cross-price elasticity of demand for ? . (Enter a numeric response using a real number rounded to two decimal places. Don't forget the minus sign.) Suppose the cross-price elasticity of demand for with respect to the price of is . In this instance, and are substitutes complements .
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Cross price elasticity of demand = (P1 + P2)/(Q1 + Q2) x (Q2 - Q1)/(P2 - P1)
P1 = $1.5 , P2 = $1.75 (syrup)
Q1 = 292, Q2 = 272 (pancakes)
CPE (pancakes) = 3.25/564 x (-20/0.25)
CPE (pancakes) = -0.46
If the CPE of demand for pancakes w.r.t. the price of syrup is -0.15, pancakes and syrup are complements (complements have negative cross price elasticity).
answerblank(1); fixed interval; blank(2) fixed ratio;