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.

---

Definitions:

Efficiently

The ability to achieve a goal or fulfill a function with the least waste of time and effort; maximizing productivity with minimum wasted effort or expense.

Economic Model

A simplified representation of economic processes, typically using mathematical formulas, to understand and predict economic behaviors.

Scientific Method

A systematic process of questioning, data collection, analysis, and hypothesis testing used to explore observations and answer questions.

Economic Model

A theoretical construct that represents economic processes by a set of variables and a set of logical or quantitative relationships between them.