Question

1. When the price of Good 1 changed from $80 per unit to $40 per unit, demand for Good 2 changed from 6000 units to 10,000 units. Calculate the appropriate elasticity. You will interpret your findings in the next question.Enter only numbers, a decimal point, and/or a negative sign as needed. Round your answer to two decimal places as necessary; if you round on intermediate steps, use four places.

2.

You must select all correct answers to get points for this question if more than one applies:

Goods 1 and 2 just described are:

Group of answer choices

unit elastic goods

elastic goods

complements

substitutes

inferior goods

normal goods

inelastic goods

Answer #1

(1) Price of good 1 changed from $80 to $40 as a result the demand for good 2 changed from 6000 units to 10,000 units

=> % change in price of good 1 = [(40-80) /80]*100 = -50

=>% change in demand for good 2 = [(10,000 - 6,000)/6000]*100 = 66.6666

Cross price elasticity of demand for good 2 w.r.t price of good 1 = (% change in demand for good 2/ % change in price of good 1)

=> Cross price elasticity of demand for good 2 w.r.t price of good 1 = (66.6666 / -50)

=> Cross price elasticity of demand for good 2 w.r.t price of good 1 =-1.33

**Answer: Cross price elasticity of demand for good 2
w.r.t price of good 1 is -1.33**

-------

(2)

Cross price elasticity of demand for good 2 w.r.t price of good 1 is negative, it implies that good 2 and good 1 are complements goods.

**Answer: Complements goods.**

Price Elasticity of Demand for good X: −0.34
Income Elasticity of Demand for good X: 0.56
Cross Price Elasticity of Demand for goods X and Y: 0.04
Given the information above, determine the following:
1. whether good X is elastic, unit elastic, or inelastic
2. whether good X follows the “law” of demand
3. whether good X is normal or inferior
4. whether good X is a luxury or a necessity
5. whether good X and good Y are complements,...

1. When incomes in a given country rose by 14%, demand for a
certain type of pasta fell by 20%. Calculate the appropriate type
of elasticity, using the methodology in the PowerPoints. You will
interpret your answer in the next question. Enter only numbers, a
decimal point, and/or a negative sign as needed. Round your answer
to two decimal places as necessary; if you round on intermediate
steps, use four places.
2. If more than one option is true, you...

1. When the price of a given type of hamster chow increased by
25%, 25% more units were produced and sold. Calculate the
appropriate elasticity. You will interpret this answer in the next
question.Enter only numbers, a decimal point, and/or a negative
sign as needed. Round all intermediate steps to four decimal places
and your final answer to two decimal places.
2.
The previous question was describing
Group of answer choices
relatively elastic price elasticity of supply
unit elastic price...

The price of good A went from $2 to $2.50 and the quantity of
good B went from 50 units to 40 units. If you use arc elasticity,
cross-price elasticity is _____ and goods A and B are _____.
a. -1; substitutes.
b. +1; complements.
c. +1; substitutes.
d. -1; complements.

40) The cross elasticity of demand for butter and margarine is
likely to be A) positive because they are substitutes.
B) positive because they are complements.
C) negative because they are substitutes.
D) negative because they are complements.
E) positive because they are normal goods.
41) If an increase in the price of green ketchup increases the
demand for red ketchup, then
A) red and green ketchup are substitutes.
B) red and green ketchup are normal goods.
C) the cross...

Q3: The following table shows the price of good J, the price of
good K (which is related in some way to good J), average income,
QD of good J and QD of good K for 5 periods.
Use the information in the table to answer the following questions.
Do not round your answers too early or your final result will be
less accurate.
Period
Price of Good J
Price of Good K
Average Income
QD of Good J
QD...

Suppose that when the price of good A rises from $18 to $20, the
quantity demanded of good B falls from 30 units to 20 units.
Using the midpoint method, the cross-price elasticity of demand
is
Select one: a. -0.26, where goods A and B are complements.
b. -0.26, where goods A and B are substitutes.
c. -3.8, where goods A and B are complements.
d. -3.8, where goods A and B are substitutes.

1) The income elasticity of demand for Good Z is –0.2, while the
cross-price elasticity of demand between Good Z and Good Y is 1.63.
Which of the following statements is correct regarding Good Z?
Group of answer choices
Good Z is a inferior good, and Goods Z and Y are
complements.
Good Z is an inferior good, and Goods Z and Y are
substitutes.
Good Z is a normal good, and Goods Z and Y are complements.
Good Z...

1.
The Price Elasticity of Demand for a good is −0.78. Which of the
following describes the Price Elasticity of Demand?
Group of answer choices
Elastic
Inelastic
Unit elastic
Perfectly elastic
2.
The Price Elasticity of Demand for a good is −1.11. Which of the
following describes the Price Elasticity of Demand?
Group of answer choices
Elastic
Inelastic
Unit elastic
Perfectly elastic

Instructions: Answer the following 5 questions using the
mid-point method. Please write out formulas and show your work.
1. Price Elasticity of Demand. Before: P=1, Qd = 4; After: P =3;
Qd =0.
2. Given your answer to #1, is this demand curve elastic or
inelastic over this range? Why?
3. Income Elasticity of Demand. Before: I=100, Qd = 1; After: I
=200; Qd =3. Normal or inferior?
4. Given your answer to #3, is this good normal or inferior?...

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