Consumer spending fell during the 2009-10 recession. A firm attempted to maintain high revenue by offering discounts to stimulate demand. It calculated the price elasticity of demand (PED) for its own product and the cross elasticity of demand (XED) for its rivals’ products. Under what circumstances could such promotions produce the outcome the company expected?
- Awhen PED is greater than one and XED is positive
- Bwhen PED is less than one and XED is negative
- Cwhen PED is less than one and XED is positive
- Dwhen PED is unity and XED is negative