You work for a marketing firm that has just landed a contract with run-of-the-mills to them promote three of their products: guppy gummies, flopsicles, and mookies. all of these products have been on the market for some time, but, to entice better sales, run-of-the-mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. as a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. run-of-the-mills provides your marketing firm with the following data: when the price of guppy gummies increases by 5%, the quantity of flopsicles sold decreases by 4% and the quantity of mookies sold increases by 5%. your job is to use the cross-price elasticity between guppy gummies and the other goods to determine which goods your marketing firm should advertise together.

Explanation:

You work for an Advertising Company. You are asked to create an advertisement for the company which has 3 products to market. They are already in market but they want to market them again with a better advertisement. So you are given a data in which the cross price elasticity is described.

Three products are Guppy Gummies, Flopsicles and mookies. It is told in the information given by the company, that with the 5% increase in the price of guppy gummies, the quantity of mookies sold increases by 5% while the quantity of flopsicles decreases by 4%. So with this data, we can assume that Guppy Gummies and Mookies are the the complementary products whereas guppy gummies and flopsicles could be substitutes.

So I would go for the advertisement of Guppy Gummies with Mookies, as they have a direct cross price elasticity. So these two products would be advertised together.

a.   is the correct choice.

good luck. : )