A 5 percent increase in the price of milk that results in a 2 percent decrease in the quantity of milk demanded yields a price e
1 answer:
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Answer:
c) 10% more peanut butter on the shelves
Explanation:
Since peanut butter has a negative income elasticity of demand (-0.5) with a decrease in income, there should be an increase in the demand. This is usually true for cheaper goods or goods with low added value. The change in demand (D) is represented as follows:
As a result, you should stock 10% more peanut butter on the shelves.
The answer is c).