Suppose the Cross-Price Elasticity of Demand Between Raspberry Jam and Strawberry

question 1

Multiple Choice

Suppose the cross-price elasticity of demand between raspberry jam and strawberry jam is 7.5.The interpretation of this result is that

• A)a 10% increase in the price of strawberry jam leads to a 7.5% increase in quantity demanded of raspberry jam.
• B)a 10% increase in the price of strawberry jam leads to a 0.75% increase in quantity demanded of raspberry jam.
• C)a 10% increase in the price of strawberry jam leads to a 75% increase in quantity demanded of raspberry jam.
• D)a 10% increase in the price of strawberry jam leads to a 7.5% decrease in quantity demanded of raspberry jam.
• E)a 10% increase in the price of strawberry jam leads to a 75% decrease in quantity demanded of raspberry jam.

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