Consider the market for peanut butter. Suppose the price of jelly increases from $2.00 to $2.25 per jar. As a result, the demand for peanut butter decreases from 295 to 279 jars. Using the midpoint formula, what is the cross-price elasticity of demand for peanut butter? nothing. (Enter a numeric response using a real number rounded to two decimal places. Don't forget the minus sign.) Suppose the cross-price elasticity of demand for peanut butter with respect to the price of jelly is negative 0.10. In this instance, peanut butter and jelly are ▼ substitutes complements .

Suppose that two firms produce differentiated products and compete in prices. as in class, the two firms are located at two ends of a line one mile apart. consumers are evenly distributed along the line. the firms have identical marginal cost, $60. firm b produces a product with value $110 to consumers.firm a (located at 0 on the unit line) produces a higher quality product with value $120 to consumers. the cost of travel are directly related to the distance a consumer travels to purchase a good. if a consumerhas to travel a mile to purchase a good, the incur a cost of $20. if they have to travel x fraction of a mile, they incur a cost of $20x. (a) write down the expressions for how much a consumer at location d would value the products sold by firms a and b, if they set prices p_{a} and p_{b} ? (b) based on your expressions in (a), how much will be demanded from each firm if prices p_{a} and p_{b} are set? (c) what are the nash equilibrium prices?