Suppose the Cross-Price Elasticity of Demand Between Grapefruit Juice and Orange

question 262

Multiple Choice

Suppose the cross-price elasticity of demand between grapefruit juice and orange juice is approximately 6.What does this mean?

• A)A 1 percent decrease in the price of grapefruit juice leads to a 6 percent increase in orange juice consumption.
• B)A 6 percent increase in the price of grapefruit juice leads to a 1 percent increase in orange juice consumption.
• C)If the price of grapefruit juice rises by $1, 6 more cartons of orange juice will be purchased.
• D)The demand for orange juice is 6 times greater than the demand for grapefruit juice.

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Definitions:

Isthmus

A narrow strip of land with sea on either side, forming a link between two larger areas of land, or a narrow organ connective tissues.

Cervix

The lower part of the uterus in the female reproductive system that connects to the vagina and dilates during childbirth to allow for the passage of a baby.

Fundus

The upper part of an organ, particularly the upper part of the stomach or the part of the eye opposite the pupil.

Mammary Glands

Glandular organs located on the chest of females and some males, responsible for milk production.