Suppose That When the Price of Root Beer Rises 10

question 237

Multiple Choice

Suppose that when the price of root beer rises 10%, the quantity of pizza demanded falls 20%. This would mean that pizza and root beer are

• A) substitutes, with a cross price elasticity of 0.5.
• B) complements, with a cross price elasticity of -0.5.
• C) substitutes, with a cross price elasticity of -2.0.
• D) complements, with a cross price elasticity of -2.0.

---

Definitions:

Standard Error

A measure of the statistical accuracy of an estimate, reflecting the standard deviation of the sampling distribution of a statistic.

Sampling Distribution

The distribution of a statistic (e.g., mean) computed from samples of a specific size drawn from a particular population.

Sampling Distribution

The probability distribution of a statistic obtained through a large number of samples drawn from a specific population.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values; a low standard deviation indicates that the values tend to be close to the mean.