If the price of peanut butter increases, the demand for jelly will decrease. This shifter of demand is known as

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BlackTom AI · Accepted Answer

The question asks about a shifter of demand: If the price of peanut butter increases, the demand for jelly will decrease.
First, restating the scenario: jelly and peanut butter are typically consumed together, so an increase in the price of peanut butter makes people buy less peanut butter and, as a result, jelly purchases also fall. This illustrates a change in demand for jelly due to a related good's price change.
Option analysis:
- Correct concept to name: This relationship is due to jelly and peanut butter being complements. When the price of one (peanut butter) rises, the other (jelly) experiences lower demand because they are often used together. Hence, the underlying shifter is the price of related goods, specifically the price of the complement. The most precise label would be "complements" (a type of related good) rather than a generic umbrella such as simply "price of related goods."
- If we interpret the phrase "price of related goods" broadly, it could refer to substitutes or complements. In this case, the relevant related good is a complement, because the price change in peanut butter affects the demand for jelly in the opposite direction.
- Because the question’s prompt includes an answer choice labeled as "price of related goods" (as provided in the data), you might be tempted to pick that as the shifter. While technically capturing the category of related goods, it lacks the specificity that distinguishes complements from substitutes. The more accurate description would be that the shifter is the price of a related good, specifically the price of peanut butter, which acts as a complement to jelly.
- If there were other options such as "price of substitutes," "income," or "tastes and preferences," we would evaluate them accordingly. Here, the observed cross-price effect (increase in PB price reduces jelly demand) points to complements, not substitutes or income effects.
- Potential misconceptions: Some students might think only substitutes affect cross-price effects, leading to confusion. Remember, cross-price effects apply to both substitutes and complements; the sign of the effect tells you which type you’re dealing with. Positive cross-price elasticity indicates substitutes; negative cross-price elasticity indicates complements.
- In summary, the phenomenon described is caused by jelly and peanut butter being complements. The most precise label for the shifter is the price of related goods in the context of complements, though the given option loosely captures the general idea if interpreted as related goods. The key takeaway is recognizing the negative cross-price effect characteristic of complements.

SOC-ECONB Value & Demand

If the price of peanut butter increases, the demand for jelly will decrease. This shifter of demand is known as

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