Question

The price elasticity of demand uses the absolute value because
it is **sometimes negative or always negative**

.The income and cross elasticities of demand do not use the
absolute value because they can be **negative only, positive
only or positive or negative**

The income elasticity of demand is positive for a **normal
or inferior** good and negative for an **inferior or
normal** good.

The cross-price elasticity of demand is positive for
**complementary or substitute** goods and negative for
**complementary or substitute** goods.

Answer #1

According to law of demand if price increases, quantity demanded decreases and vice versa. Therefore price elasticity takes absolute value because it is always negative.

The sign of income elasticity determines whether a good is normal or inferior. The sign of cross price elasticity determines whether a good is substitute or complementary. Therefore it doesn't use absolute value because they can be positive or negative.

The income elasticity of demand is positive for a normal good and negative for an inferior good.

If cross price elasticity positive, then the goods are complements because demand for one decreases with increase in price of another. If cross price elasticity is negative then, the goods are substitute good.

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...

Cross-price elasticity of demand is
a. negative for complementary goods.
b. negative for substitute goods.
c. positive for general goods.
d. unitary for secondary goods.

Which would be most relevant to a positive sign (+) on a
cross-price elasticity ?
Group of answer choices
an inferior good.
a Giffen good.
a substitute good.
a normal good.
a complementary good.

Taking the absolute value of the cross-price elasticity of
demand is incorrect because it would:
remove the ability to tell whether the two products have
inelastic demand or elastic demand.
cause the value of the cross-price elasticity of demand to
become smaller.
remove the ability to tell whether the two products are
substitutes or complements.
cause the value of the cross-price elasticity of demand to
become zero.
The percent change in insulin demanded for any price change is
zero. The...

1. For each of the following say either "positive," "negative,"
or "either."
a. The (price) elasticity of demand.
b. The (price) elasticity of supply.
c. The cross-price elasticity for substitutues.
d. The cross-price elasticity for compliments.
e. The income elasticity for a normal good.
f. The income elasticity for an inferior good.
2. When the price of good X goes from $20 to $25, the quantity
goes from 100 to 65.
a. What is the elasticity of demand?
b. Is...

If the cross-price elasticity of demand between two goods is
-0.5, two goods are __________. If the income elasticity of a good
is -2, that good is a ___________.
Substitutes: Normal good
Complements: Inferior
Complements: Necessity
Substitutes: Luxury

If goods X and Y are substitute goods, then the cross-price
elasticity of the price of good Y on the demand
for good X is:
Select one:
a. positive
b. zero
c. undefined
d. negative

In Chapter 6 we learned about many different types of
Elasticity. For this discussion question we're going to practice
what some of these elasticities represent. For each of the
following come up an example of a good that you believe has the
property listed:
A good that has own-price elasticity between 0
and 1 (in absolute value)
A good that has own-price elasticity larger
than 1 (in absolute value).
Two goods that have negative cross-price
elasticity.
Two goods that have...

2. What is the income elasticity of demand? How can it be used
to determine whether a good is a normal good or an inferior good?
What is the cross-price elasticity of demand? How can it be used to
determine whether two goods are substitutes or compliments?

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...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 21 minutes ago

asked 21 minutes ago

asked 23 minutes ago

asked 38 minutes ago

asked 44 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago