Question

Suppose the cross-price elasticity of demand between goods X and Y is 5. How much would the price of good Y have to change in order to change the consumption of good X by 20 percent? percent

Answer #1

Cross price elasticity of demand suggests us the percentage change in quantity demanded for each 1 percent change in price of other related goods. Given that cross price elasticity of demand for spiral notebooks is between goods X and Y is 5. This implies ec = 5

Now ec = % change in consumption (quantity demanded) of X / % change in price of Y

We are given that the % change the consumption of good X = 20 percent. Hence we see that

5 = 20%/% change in price of Y

% change in price of Y = 20%/5 = 4%

Hence the price of good Y have to change by 4%.

Suppose the
cross-price elasticity of demand between goods X and
Y is -5. How much would the price of good Y have
to change in order to change the consumption of good X by
50 percent?
Instruction: If you are entering a negative
number, be sure to use a negative sign (-).
_________percent

Suppose the own price elasticity of demand for good X is -5, its
income elasticity is 1, its advertising elasticity is 3, and the
cross-price elasticity of demand between it and good Y is 4.
Determine how much the consumption of this good will change if:
a) The price of good X decreases by 5 percent.
_____%
b) The price of good Y increases by 8 percent.
_____%
c) Advertising decreases by 2 percent. _____%
d) Income increases by 4...

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...

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 -2, its
income elasticity is -1, its advertising elasticity is 2, 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 4 percent. percent
b. The price of good Y increases by...

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

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

Suppose the cross-price elasticity of demand between Coke and
Pepsi is 0.5. If the price of Pepsi is projected to go up 10%, how
much will the demand for Coke change?

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

Price Elasticity of Demand for good X: −0.34
Income Elasticity of Demand for good X: 0.56
Cross Price Elasticity of Demand for goods X and Y: 0.04
Given the information above, determine the following:
1. whether good X is elastic, unit elastic, or inelastic
2. whether good X follows the “law” of demand
3. whether good X is normal or inferior
4. whether good X is a luxury or a necessity
5. whether good X and good Y are complements,...

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