Exploring the Relationship Between Tennis Balls and Graphite: A Reflection
What is the cross-price elasticity of demand for tennis balls with respect to the price of graphite at equilibrium values?
A. -11.945
B. 1.235
C. -3.529
D. -1.015
E. -2.223
What does the sign of this elasticity tell you about whether tennis balls and graphite are substitutes or complements?
Final answer: The cross-price elasticity of demand for tennis balls with respect to the price of graphite is -11.945, indicating that tennis balls and graphite are complements.
Answer:
The cross-price elasticity of demand for tennis balls with respect to the price of graphite is -11.945.
This negative value suggests that tennis balls and graphite are complements in the market.
Reflecting on the cross-price elasticity of demand for tennis balls with respect to the price of graphite provides valuable insights into the relationship between these two products in the market. When the price of graphite, a material used in making tennis rackets, changes, it impacts the demand for tennis balls.
The calculated cross-price elasticity of -11.945 indicates that tennis balls and graphite are complements. This means that as the price of graphite increases, the demand for tennis balls decreases, and vice versa. Consumers perceive tennis balls and graphite as products that are used together or have a complementary relationship.
Understanding the concept of cross-price elasticity helps market analysts and business strategists make informed decisions about pricing, promotions, and product positioning. It highlights the interdependence between goods and how changes in the price of one product can affect the demand for another.
Overall, the negative cross-price elasticity value of -11.945 reveals that tennis balls and graphite have a complementary relationship in the market, providing valuable insights into consumer preferences and behavior.