Question

If the cross-price elasticity of demand between Good A and Good B is 3, the price of Good B increases, and the price elasticity of demand for Good B is inelastic, we can expect to see a ________ change in the quantity demanded for Good A.

a.positive, zero

b.positive, small

c.positive, large

d.negative, one-for-one negative,

e.infinite

Answer #1

Cross-price elasticity of demand between Good A and Good B = 3. This implies that Good A and Good B are substitutes because cross-price elasticity is positive.

If price of good B increases , and elasticity of demand for Good
B is inelastic. Then , quantity demanded for good A would increase.
Then , we could expect to see a **positive , large**
change in the quantity demanded for good A. Because quantity
demanded for good B changes by a small amount and therefore ,
demand for good A changes by a large amount because
cross-elasticity of demand is 3 . Hence**, option(C) is
correct.**

The cross elasticity of demand for good A and good B is
minus−0.7.
This means that
A.
if the price of good A increases by 10 percent, the quantity
demanded of good B decreases by 7 percent.
B.
the goods are substitutes.
C.
if the price of good A increases by 10 percent, the quantity
demanded of good B increases by 7 percent.
D.
the goods are complements.
E.
both A and D are correct.

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...

1-As we move up the demand curve, the price elasticity of demand
* A) increases B) decreases C) becomes unitary D) does not
change
2-If the price of lemonade increases relative to the price of
grape juice, the demand for: * A) grape juice will decrease. B)
grape juice will increase. C) lemonade will decrease. D) lemonade
will increase.
3-An increase in price will result in no change in total revenue
if: * A) the percentage change in price is...

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...

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...

The cross-price elasticity of demand between good A and good B
is positive. Are good A and good B complements or substitutes?

Assume the price elasticity of demand for a good is –1.23. The
demand for this good is _______ which means the percentage change
in quantity demanded (in absolute value) is _______ the percentage
change in price (in absolute value).
Group of answer choices
elastic, larger than
elastic, smaller than
inelastic, smaller than
inelastic, larger than

1. If the price elasticity of demand for tomatoes is -1.25 and
quantity changes by 3% due to this large crop, how much will
quantity demanded change? Show your work for the possibility of
partial credit.
2. An industry in which one firm can supply the entire market at
a lower price than two or more firms can is called a
a. legal monopoly
b. single-price monopoly
c. natural monopoly
d. price-discriminating monopoly
3. Suppose excellent weather leads to a...

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

Suppose the own price elasticity of demand for good X is -3, its
income elasticity is -2, its advertising elasticity is 4, and the
cross-price elasticity of demand between it and good Y is -2.
Determine how much the consumption of this good will change if:
Instructions:
Enter your responses as percentages. Include a minus (-)
sign for all negative answers.
a. The price of good X decreases by 7 percent.
b. The price of good Y increases by 10...

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