Suppose that when the price of peanut butter falls from $3 to $2 per jar, the quantity of jelly purchased falls from 15 million jars to 10 million jars. The cross-price elasticity of demand between peanut butter and jelly using the mid-point method is.................... Therefore, the goods are.................... (A) -1: complements (B) 1; substitutes 1; complements D) -1: substitutes

Suppose that when the price of peanut butter falls from $3 to $2 per jar, the quantity of jelly purchased falls from 15 million jars to 10 million jars. The cross-price elasticity of demand between peanut butter and jelly using the mid-point method is.................... Therefore, the goods are.................... (A) -1: complements (B) 1; substitutes 1; complements D) -1: substitutes

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter6: Simple Pricing

Section: Chapter Questions

Problem 5MC

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Subject: Business economics Remaining: Q3) Colgate sells its standard size toothpaste for Rs. 25. Its sales have been on an average 8000 units per month over the last year. Recently, its competitor Sparkle reduced the price of its same standard size toothpaste from Rs. 35 to Rs. 30. As a result Colgate sales declined by 1500 units per month. Calculate the cross elasticity between the two products. What does your estimate indicate about the relationship between the two?