When the Price of Bread Increases by 3 Percent, the Quantity

question 41

Multiple Choice

When the price of bread increases by 3 percent, the quantity demanded of crackers increases by 2 percent. The cross elasticity of demand between crackers and bread is:

• A) 0.67.
• B) 1.5.
• C) 2.5.
• D) 3.2.
• E) 5.0.

---

Definitions:

Coin Toss

A simple randomness procedure used to decide between two equally probable outcomes with the flip of a coin.

Expected Value

The predicted value of a variable, calculated as the sum of all possible values each multiplied by the probability of its occurrence.

Expected Value

An average value determined by weighing all potential outcomes of a random variable according to their likelihood of happening.

Payoffs

The returns or benefits received from a particular course of action or decision, often evaluated in decision-making processes.