Suppose the Price of Jelly Increases by 10 Percent and the Amount

question 4

Multiple Choice

Suppose the price of jelly increases by 10 percent and the amount of peanut butter purchased decreases by 20 percent. What is the cross-price elasticity of demand between these two goods?

• A) 0.5
• B) 2
• C) −0.5
• D) −2

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Definitions:

Simple Interest

Interest computed solely on the initial amount of a loan or deposit, not taking into account the effects of compounding.

Annual Raises

Incremental increases in salary or wages that employees receive on a yearly basis as a reward for performance and/or to keep up with inflation.

Annual Salary

The total amount of money that an employee is paid annually by their employer for their job duties.

Annual Raises

Annual raises are salary increases awarded to employees once a year, often based on performance, inflation, or company profitability.