Suppose the Cross-Price Elasticity of Demand Between Grapefruit Juice and Orange

question 262

Multiple Choice

Suppose the cross-price elasticity of demand between grapefruit juice and orange juice is approximately 6.What does this mean?

• A)A 1 percent decrease in the price of grapefruit juice leads to a 6 percent increase in orange juice consumption.
• B)A 6 percent increase in the price of grapefruit juice leads to a 1 percent increase in orange juice consumption.
• C)If the price of grapefruit juice rises by $1, 6 more cartons of orange juice will be purchased.
• D)The demand for orange juice is 6 times greater than the demand for grapefruit juice.

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Definitions:

Availability Heuristic

A cognitive shortcut that relies on immediate examples that come to mind when evaluating a specific topic, concept, method or decision.

Sole Responsibility

A situation or task where one person is entirely accountable without sharing duties or blame with others.

Recall

A measure of memory in which the person must retrieve information learned earlier, as on a fill-in-the-blank test.

Availability Heuristic

A cognitive shortcut that depends on the first examples that pop into someone's head when considering a particular topic, concept, strategy, or choice.