Assume that bread and butter are complementary goods, which of the following would decrease the demand for butter?

A) A decrease in the price of bread

B) An increase in the price of bread

C) A decrease in the price for butter

D) None of the above

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Joshua StredderLv10

31 Oct 2020

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3) In an 8 hour day, Andy can produce either 8 loaves or 24 kg of butter, Rolfe can produce either 24 loaves or 24 kg of butter. Andy and Rolfe A) can gain from exchange if Andy specializes in butter production and Rolfe specializes in bread production B) can exchange but only Rolfe will gain. C) can gain from exchange if Andy specializes in bread production and Rolfe specializes in butter production. D) can exchange but only Andy will gain. E) cannot gain from exchange.

Think about the demand for wheat bread.

a. What is a substitute good for wheat bread? How does an increase in the price of wheat bread impact the market for your chosen substitute good?

b. What is a complementary good for wheat bread? How does a decrease in the price of wheat bread impact the market for your chosen complementary good?

Which of the following pairs of goods are most likely to have a negative cross-price elasticity?

A. Bread and butter

B. Tennis rackets and golf clubs

C. Bicycles and automobiles

D. Socks and shoes