Suppose the market demand for peanut butter is:

Qd = 8J - 0.0004N - 2P

J = price of a jar of jam, $5.50

N = income measured in dollars, $30,000

P = price of a jar of peanut butter

11. What can type of good is peanut butter?

a. inferior good

b. luxury

c. normal good

d. necessity

Why is the answer A?

12. How are peanut butter and jam related?

a. They are substitutes because there is a negative relationship between the two goods. b. They are substitutes because there is a positive relationship between the two goods.

c. They are complements because there is a positive relationship between the two goods.

d. They are complements because there is a negative relationship between the two goods.

Why is the answer C?