Question

Cross-price elasticity of demand is calculated as
the

total percentage change in quantity demanded divided by the total
percentage change in price.

percentage change in the price of good 1 divided by the percentage
change in the price of good 2.

percentage change in quantity demanded divided by the percentage
change in income.

percentage change in quantity demanded of good 1 divided by the
percentage change in the price of good 2.

Answer #1

Cross-price elasticity of demand is calculated as the

percentage change in quantity demanded of good 1 divided by the percentage change in the price of good 2.

Cross price elasticity measures the sensitivity in the demand of one product against the price change in the 2nd product.

Price elasticity formula: Exy = percentage change in Quantity
demanded of X / percentage change in Price of Y.

% Qx = (Q1-Q2) / [1/2 (Q1+Q2)] where Q1 = initial Qd of X, and Q2 = new Qd of X.

% Py = (P1-P2) / [1/2 (P1 + P2)] where P1 = initial Price of Y, and P2 = New Price of Y.

Putting the two above equations together:

Exy = {(Q1-Q2) / [1/2 (Q1+Q2)] } / {(P1-P2) / [1/2 (P1 + P2)]}

Q8. Cross-price elasticity of demand is calculated as
the
A) percentage change in quantity demanded divided by percentage
change in price of a good.
B) percentage change in quantity demanded of one good divided by
percentage change in price of a different good.
C) percentage change in quantity sold divided by percentage
change in buyers' incomes.
Q.9. If the cross-price elasticity of demand for
computers and software is negative, this means the two goods
are
A) substitutes. B) complements. C)...

The cross-price elasticity of demand measures the
absolute change in the quantity demanded of one good divided by
the absolute change in the price of another good.
percentage change in the price of one good divided by the
percentage change in the quantity demanded of another good.
percentage change in the quantity demanded of one good in one
location divided by the price of the same good in another
location.
percentage change in the quantity demanded of one good divided...

Cross Price Elasticity simply measures the percentage
change in quantity demanded of one good divided by the percentage
change in price of another good. For example, the enrollment of
college students at California state-funded community colleges
would probably fall slightly if the popular
California UC and CSU universities (e.g. UC Berkeley) lowered their
prices by 50 percent.
True or False?

The price elasticity of demand measures:
Select one:
a. the percentage change in quantity demanded of a good in
response to a one percentage change in
income
b. none of the above
c. the change in the number of units demanded of a good in
response to a one percentage change in
its price
d. the percentage change in quantity demanded of a good in
response to a one dollar change in its
price

A measure of the rate of percentage change of quantity demanded
with respect to price, holding all other determinants of demand
constant is
a.
Income elasticity of demand
b.
Own price elasticity of demand
c.
Price elasticity of market equilibrium
d.
Cross price elasticity of demand
The value of the income elasticity of demand coefficient for
Good X is given as 0.1. This means that
a.
as income increases by 10 percent, quantity demanded rises by 1
percent.
b.
as income...

The cross-price elasticity of demand between goods X and Y
measures the responsiveness of the quantity of X demanded to
changes in the price of Y.
is the percentage change in the price of Y divided by the
percentage change in the quantity of X demanded.
is greater than zero if X and Y are substitutes.
both a and c
all of the above

The following table lists the cross elasticity of demand for
several goods, where the percentage quantity change is measured for
the first good of the pair, and the percentage price change is
measured for the second good.
Good Cross elasticity of demand
Air-conditioning units and kilowatts of electricity -0.34
Coke and Pepsi 0.63
High-fuel-consuming SUVs and gasoline -0.28
McDonald’s burgers and Harvey burgers 0.82
Butter and Margarine 1.54
1.Explain the sign of each of the cross elasticities. What does
it...

a) Using the percentage change method, calculate the cross
elasticity if the price of margarine falls from $2 to $1.60 and the
quantity of butter demanded falls from 500 to 450. Are these two
products substitutes or complements? b) If the income elasticity of
a product is 2, how much would income need to change for quantity
to increase by 20%? Is this a normal or inferior good?

If the percentage change in quantity demanded is equal to the
percentage change in price for small changes in price and quantity
near the point on a linear demand function graph corresponding to
the price of $15 per unit at which the quantity demanded is 1,000
units, what is the effect on total consumer expenditure on the good
if there is a relatively large increase in price to above $15?
a) Total consumer spending on the good will increase
b)...

Determine the price elasticity of demand, the cross-price
elasticity of demand or the income elasticity in the following
scenarios.
a. Consider the market for coffee. Suppose the price rises from
$4 to $6 and quantity demanded falls from 120 to 80. What is price
elasticity of demand? Is coffee elastic or inelastic?
b. John’s income rises from $20,000 to $22,000 and the quantity
of hamburger he buys each week falls from 2 pounds to 1 pound. What
is his income...

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