-Refer to the Graphs Above to Answer This Question

question 62

Multiple Choice

-Refer to the graphs above to answer this question.Suppose that the price of nuts decreases from P₁ to P₂ and the demand curve for chocolates shifts to the right from D₁ to D₂.What can be said about the cross-elasticity of demand for nuts and chocolates and their relationship?

• A)The cross-elasticity of demand coefficient between nuts and chocolates is negative and nuts and chocolates are substitutes.
• B)The cross-elasticity of demand coefficient between nuts and chocolates is negative and nuts and chocolates are complements.
• C)The cross-elasticity of demand coefficient between nuts and chocolates is positive and nuts and chocolates are complements.
• D)The cross-elasticity of demand coefficient between nuts and chocolates is positive and nuts and chocolates are substitutes.

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Definitions:

Fully Depreciated

A status of an asset whose entire cost has been expensed with respect to depreciation, leaving its book value at zero except for salvage value, if any.

Excess Capacity

A situation where a company can produce more goods or services than currently demanded by its market.

Unit Variable Cost

The variable cost associated with producing one unit of a product, including materials, labor, and other costs that vary with production volume.

Special Unit Price

A unique price offered for a product or service, typically different from the standard pricing.