When the price of bananas rises 2 percent, the quantity demanded of peanut butter falls 4 percent

a. What is the cross elasticity of demand between these two goods?
b. How are these goods related?
c. If the price of bananas rises, how will that affect the demand curve for peanut butter?

a. The cross elasticity of demand equals -2.
b. Because the cross elasticity of demand is negative, the cross elasticity indicates that the two goods are complements.
c. If the price of bananas rises, the demand for peanut butter decreases and the demand curve for peanut butter shifts leftward.