AP Microeconomics

Category - Microeconomics

Peanut butter and jelly are complements. Mr. Costanza is a peanut farmer. Mr. Costanza is probably likely to sell fewer peanuts at a lower price if which of the following is true?
  1. The price of strawberry jam increases
  2. The price of strawberry jam decreases
  3. Bad storms ruin half of Mr. Costanza’s peanut harvest
  4. Mr. Costanza’s farm workers decide to create a union
Explanation
Answer - A - Mr. Costanza is probably likely to sell fewer peanuts at a lower price if the price of strawberry jam increases.

Key Takeaway: Most likely, Mr. Costanza will sell fewer of his peanuts if less strawberry jam is being purchased because the decreased demand for peanuts will mean that those peanuts he does manage to sell will be sold at a lower price.
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