Suppose the Cross-Price Elasticity of Demand Between Peanut Butter and Jelly

question 19

Multiple Choice

Suppose the cross-price elasticity of demand between peanut butter and jelly is −2.50. This implies that a 20 percent increase in the price of peanut butter will cause the quantity of jelly purchased to

• A)fall by 8 percent.
• B)fall by 50 percent.
• C)rise by 8 percent.
• D)rise by 50 percent.

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