Suppose the cross-price elasticity of demand between peanut butter and jelly is - 2.50. This implies that a 20 percent increase in the price of peanut butter will cause the quantity of jelly purchased to

Decrease by 50 percent.

Explanation:

Given that,

Cross-price elasticity of demand between peanut butter and jelly = - 2.50

This means that peanut butter and jelly are complimentary goods.

Increase in the price of peanut butter = 20 percent

Therefore,

Cross-price elasticity of demand = Percentage change in the quantity demanded of Jelly : Percentage change in the price of peanut butter

-2.50 = Percentage change in the quantity demanded of Jelly : 20

-2.50 * 20 = Percentage change in the quantity demanded of Jelly

- 50% = Percentage change in the quantity demanded of Jelly

This indicates that a 20% increase in the price of peanut butter will lead to reduce the quantity demanded of Jelly by 50%.