What Would Happen to the Equilibrium Price and Quantity of Peanut

question 315

Multiple Choice

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts fell,the price of jelly (a complementary good) fell,more firms decided to produce peanut butter,and health officials announced that eating peanut butter was good for you

• A)price will fall and the effect on quantity is ambiguous
• B)price will rise and the effect on quantity is ambiguous
• C)quantity will fall and the effect on price is ambiguous
• D)quantity will rise and the effect on price is ambiguous

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Definitions:

Standard Error Of Estimate

A measure of the accuracy of predictions made with a regression model, specifically, it estimates the standard deviation of the error term.

Covariance

A measure that indicates the extent to which two variables change together. If the greater values of one variable mainly correspond with the greater values of the other variable, and the same holds for the lesser values, the covariance is positive; otherwise, it is negative.

Coefficient Of Correlation

A statistical measure that calculates the strength of the relationship between the relative movements of two variables.

Stronger Correlation

Indicates a more pronounced relationship between two variables, often implied by a correlation coefficient closer to -1 or 1.