What Does It Tell You If the Cross Price Elasticity

question 7

Multiple Choice

What does it tell you if the cross price elasticity of demand between two products is +2?

• A) The products are substitutes and a price increase in one by 3% decreases demand for the other by 1.5%.
• B) The products are complements and a price increase in one by 3% decreases demand for the other by 1.5%.
• C) The products are complements and a price increase in one by 3% decreases demand for the other by 6%.
• D) The products are substitutes and a price increase in one by 3% increases demand for the other by 6%.

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Definitions:

Iron Deficiency

A condition resulting from too little iron in the body, leading to insufficient production of healthy red blood cells.

Diet

The sum of food consumed by a person, affecting health and weight management.

Minerals

Inorganic substances required by the body in small amounts for a variety of functions, including bone formation and enzyme activity.

Nutritional Substances

Elements found in food that are essential for the growth, development, and maintenance of the body; includes vitamins, minerals, proteins, fats, and carbohydrates.