Adjust your purchase of peanut butter

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Reference no: EM131096477

You are the manager of a supermarket, and you know that the income elasticity of peanut butter is exactly −0.5. Due to the economic recession, you expect incomes to increase by 10 percent next year. How should you adjust your purchase of peanut butter?

Buy 5 percent more peanut butter.

Buy 5 percent less peanut butter.

Buy 10 percent more peanut butter.

Buy 10 percent less peanut butter.

Reference no: EM131096477

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