Assume peanut butter and jelly are complements. Ceteris paribus, an increase in the price of peanut butter will cause the equilibrium price of jelly to
A. Decrease and the equilibrium quantity of jelly to decrease.
B. Decrease and the equilibrium quantity of jelly to increase.
C. Increase and the equilibrium quantity of jelly to increase.
D. Increase and the equilibrium quantity of jelly to decrease.
Answer: A
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Excess demand occurs when
a. the actual price is greater than the equilibrium price b. equilibrium is undefined c. consumer wants are unlimited d. the actual price is less than the equilibrium price e. the market is in equilibrium
Prices serve the public interest by
a. making resource owners wealthy. b. rationing scarce resources. c. keeping poor people from purchasing more than they can afford. d. forcing the government to participate in the market.
Why would an ounce of gold be priced higher than an ounce of coffee beans, even though coffee is generally considered more essential than gold? Explain the paradox in terms of marginal and total utility
Please provide the best answer for the statement.
In the short run, if a firm operates, it earns a profit of $500. The fixed costs of the firm are $100. This firm has a producer surplus of
A) $500. B) $100. C) $400. D) $600.