The cross-price elasticity between mobile phones

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The cross-price elasticity between mobile phones and ear buds is estimated to be 2.5. What do you predict will happen to ear bud demand (sales) and price, other things being equal, if mobile phone prices fall?

a. The quantity demanded for mobile phones would fall, demand for ear buds would fall, and the price of ear buds would rise.

b. The quantity demanded for mobile phones would fall, demand for ear buds would rise, and the price of ear buds would rise.

c. The quantity demanded for mobile phones would rise, demand for ear buds would rise, and the price of ear buds would rise.

d. The quantity demanded for mobile phones would rise, demand for ear buds would fall, and the price of ear buds would fall.

Reference no: EM13735556

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