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.

---

Definitions:

Straight-Line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its useful life.

Semiannual Interest

Refers to the payment of interest on a loan or financial instrument every six months.

Bond Premium

The excess value of a bond above its face value in the marketplace.

Straight-Line Method

A depreciation method that allocates an equal amount of the depreciable cost of an asset to each year of its useful life.