Question

Why is price elasticity of demand negative for the airline industry but positive for income?

Answer #1

When there is an increase in the price of airline tickets then the quantity demanded will fall. So, there exists an inverse relationship between the price and quantity demanded of airline tickets. Therefore, the price elasticity of demand is negative.

When there is an increase in income of consumers then the demand of airline tickets will increase. So, there exists a direct relationship between the price and quantity demanded. Therefore, the income elasticity of demand is positive.

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...

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...

The difference between price elasticity of demand and income
elasticity of demand is that
A. income elasticity of demand examines how an individual's
income changes when prices change and the price elasticity of
demand examines how quantity demand changes when price changes.
B. income elasticity measures the responsiveness of income to
changes in supply while price elasticity of demand measures the
responsiveness of demand to a change in price.
C. income elasticity refers to a horizontal shift of the demand...

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...

17. If income elasticity of demand is negative, then an increase
in income would cause a rightward / leftward shift
of the demand curve. This product is a _____ good. If at a constant
price, an increase in consumer income from $10,000 to $15,000
caused a decrease in demand from 200 units to 130 units, then the
numeric value for income elasticity is _____ .

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.

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...

Suppose the own price elasticity of demand for the products of
an industry is (-0.7), and the Rothschild Index is 0.15. What
happens to the demand of a representative firm in this industry, if
its price increases by 1%?

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...

Suppose the own price elasticity of demand for good X is -5, its
income elasticity is -1, its advertising elasticity is 4, and the
cross-price elasticity of demand between it and good Y is 3.
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 6 percent.
percent
b. The price of good Y increases by...

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