Question

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.

Answer #1

OPTION C

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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...

Suppose that when the price of water rises by 30 percent, the
quantity demanded falls by 10 percent. The price elasticity of
demand for water is ____________, making water an _______________
good (in this example).

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.

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...

Assume QA = 4,900 - 60*PA +
10*PB, where QA is the quantity of
good A demanded, PA is the price of good A, and
PB is the price of good B.
a) Suppose at first PA = $49 and PB = $50.
Then the price of good A rises to PA' = $51 (while
PB remains $50). Using the arc or midpoint formula,
calculate the price elasticity of demand for good A.
ED =
b) Now suppose at first...

When the price is $2, quantity demanded is 10. When the price
rises to $8, quantity demanded falls to 2.
What is the value of the elasticity of demand? Is it elastic or
inelastic?

The following table provides the demand for three goods (A, B,
and C) at two prices for good A.
Price of GOOD A
Quantity Sold of A
Quantity Sold of B
Quantity Sold of C
$30
1400
400
500
$40
700
210
825
a) Calculate the midpoint cross-elasticity of demand between
good A and B. Are these goods substitutes or complements?
b) Calculate the midpoint cross elasticity of demand between
good A and C. Are these goods substitutes or complements?

2.) For a certain good, when the good’s price falls from $22 to
$20, its quantity demanded rises from 2,000 to 2,200 units. Given
this information, find the price elasticity of demand two different
ways. First, use the elasticity of demand formula. Second, use the
total revenue test. You must use both methods. show all work for
credit.

When the price of doodads falls from $16 to $10 the quantity of
doodads demanded rises from 150 to 160 units.
a) Compute and categorize the elasticity of demand of
doodads.
b) Interpret the number you calculated in part (a) for the
elasticity of demand for doodads.
c) If the government placed an excise tax on doodads, who would
pay the majority of that tax: consumers or firms? Explain verbally
(no graph required).

If the price rises on olive oil and the quantity demanded of
garlic drops, then these two items are considered to be:
there is not enough information to make a determination.
complements
normal goods
substitutes

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