Neco Model Questions Vol1 2025 Economics Question 35

Practice objective / multiple choice question 35 from the 2025 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2025 Economics Objective / Multiple Choice Medium Difficulty
Question 35 NECO_MODEL_QUESTIONS_VOL1 • 2025 • ECONOMICS • objective

When the price of bread rises from \(\text{₦}150\) to \(\text{₦}180\), the quantity demanded of butter increases from 200 kg to 260 kg. (a) Using the midpoint method, calculate the cross‑price elasticity of demand for butter with respect to the price of bread, (b) state whether the two goods are substitutes or complements, and (c) if the price of bread is expected to rise an additional 10\%, estimate the percentage change in the quantity demanded of butter.

Answer Options

A. Cross‑price elasticity ≈2.00 (substitutes); butter quantity expected to rise by about 20.0%
Correct Answer B. Cross‑price elasticity ≈1.44 (substitutes); butter quantity expected to rise by about 14.4\%
C. Cross‑price elasticity ≈0.72 (substitutes); butter quantity expected to rise by about 7.2%
D. Cross‑price elasticity ≈1.44 (complements); butter quantity expected to rise by about 14.4%
Correct Answer
B
Correct Option:
Cross‑price elasticity ≈1.44 (substitutes); butter quantity expected to rise by about 14.4\%

About This Question

This is Neco Model Questions Vol1 2025 Economics Question 35. It is one of the objective questions from the 2025 Neco Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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