A unit of good X is sold for RM2, and a unit of good Y is sold for RM4. Both are complementary goods. When the price of good X increases by RM0.50, the quantity demanded of good Y will change by 2.5%. Calculate the cross price elasticity for both of the goods.

A unit of good X is sold for RM2, and a unit of good Y is sold for RM4. Both are complementary goods. When the price of good X increases by RM0.50, the quantity demanded of good Y will change by 2.5%. Calculate the cross price elasticity for both of the goods.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter6: Elasticity

Section: Chapter Questions

Problem 2WNG: As the price of good X rises from 10 to 12, the quantity demanded of good Y rises from 100 units to...

See similar textbooks

Related questions

Q: If an increase in income results in a decrease in the quantity demanded for a product, the product…

A: Inventory, equipment, materials, and finished products are also forms of goods. The products that…

Q: Suppose a consumer had an income of $100 and spends $50 on potatoes. Suppose now that his income…

A: Given information: Initial income: $100 Final income: $150 Initial spending (demand) on potatoes:…

Q: Last month, sellers of good Y took in $150 and sold 50 units of good Y. This month sellers of good Y…

A: Complement goods: Two goods are said to be complements or complementary goods if the rise in the…

Q: If the cross price elasticity of demand between two goods is -1.2, then the two goods are:

A: Cross price elasticity of demand refers to the relationship between the quantity demanded of one…

Q: The cross elasticity of demand between siopao and catsup is negative. This tells us that___. a.…

A: Cross price elasticity of demand is the responsiveness of the quantity demanded of a good to a…

Q: he cross-price elasticity between a pair of complementary goods will be A) positive or zero…

A: Cross price elasticity of demand measures the responsiveness of quantity demanded of good 1 with…

Q: Cross elasticity of demand is: C Negative for complementary goods C Negative for substitute goods C…

A: The cross-price elasticity of demand measures the responsiveness of demand for a good or service…

Q: The cross elasticity of demand for good a with respect to good B is -0.5. A 50% change in the price…

A: Cross price elasticity of demand measures the responsiveness of quantity demanded of good 1 with…

Q: In order to prove that Motrin and Ibuprofen are substitutes, one should measure the ________ and get…

A: Measurement of elasticity is widely used by economists to understand the relationship between…

Q: An economist estimated the cross-price elasticity for peanut butter and jelly to be -1.5. Based on…

A: The markets in an economy deals with various types of goods, and services, and the suppliers take…

Q: If the cross elasticity of demand for two goods, A and B, is -5,0, then this implies that these…

A: Cross price elasticity of demand measures the responsiveness in quantity demanded of a good to a…

Q: unit of good X is sold for RM2, and a unit of good Y is sold for RM4. Both are complementary goods.…

A: If two goods are complementary in nature then increase in price of one good leads to decrease in the…

Q: If the cross-price elasticity of demand between blueberries and yogurt is negative, then the two…

A: Cross price elasticity of demand measure the change in quantity demanded of product or service in…

Q: Calculate the cross price elasticity of demand (SHOW YOUR WORK) and specify if the goods are…

A: The elasticity of demand measures the percentage change in quantity demanded with respect to a…

Q: Income of a person is 8000 and he uses 60 units of a commodity. Calculate income elasticity of…

A: Income elasticity of demand displays the the responsiveness of the quantity demanded for a…

Q: Suppose a 4 percent increase in income results in a 2 percent decrease in the quantity demanded of a…

A: Income elasticity of demand measures the responsiveness of percentage change in the demand due to…

Q: An individual spends all his income on two goods X and Y. If with the rise in price of good X, the…

A: Price elasticity of demand is a measure which measures the degree of responsiveness of demand for a…

Q: Suppose a 6 percent increase in income results in a 2 percent decrease in the quantity demanded of a…

A: Income elasticity of demand = %change in quantity demanded / % change in price

Q: Assume the cross-elasticity of demand for car tires with respect to the price of cars is 2. What…

A: The cross price elasticity measures the responsiveness of quantity demanded for one good to the…

Q: When the price of Caribou Coffee increased by 12 percent, the quantity demanded of Gloria Jean's…

A: Price elasticity of demand(e) is the change in the quantity demanded(Q) of a good for a one percent…

Q: cross-price elasticity of demand of 1.2

A: Cross-price elasticity: Cross elasticity of demand refers to the percentage change in quantity…

Q: If the cross-price elasticity of demand between good A and good B is -1.25, then the goods are A…

A: Cross-price elasticity: - Cross-price elasticity of demand measures the responsiveness of change in…

Q: If the cross-price elasticity between two goods is negative, these goods are a. Inferior. b.…

A: Separate usage of the complimentary good has almost zero benefit, however if associated with some…

Q: An individual spends all his income on three goods. He buys 550 units of X at $1 per unit, 425 units…

A: It has been said that the individual spends all his money income on these three goods.

Q: Someone tells you the "absolute value" of the cross price elasticity of two substitutes like Coke…

A: the cross elasticity of demand or cross-price elasticity of demand measures the percentage change…

Q: The cross-price elasticity of demand between good X and good Y is -3. Given this information, which…

A: The quantity demanded of a good is defined as the amount of the good consumers are willing and able…

Q: If the price of one good decreasing causes the price of another good to increase, then: a. demand is…

A: Substitute good – a good in which can substitute for another good (competitor’sgood). An increase…

Q: If the price of a good falls by 10% and the percentage increase in the total amount consumers spend…

A: Price elasticity of demand is the measure of percentage change in the quantity demanded of a…

Q: The income elasticity of demand of good B, is as follows: Good B: 0.2 If income rises by 5 %. By…

A: Income elasticity of demand = %age change in demand / %age change in income 0.2 = %age change in…

Q: If a 10 percent decrease in the price of a good leads to a 20 percent increase in the quantity…

A: Price elasticity of demand measures the responsiveness of quantity demanded for a good due to…

Q: If the quantity demanded from good X has increased from 40 to 50 units as a result of the increase…

A: quantity demanded from good X has increased from 40 to 50 units due to this increase in the consumer…

Q: When the price of good Y increases from $2 to $3, the quantity demanded for good X decreases from 20…

A: Cross-price elasticity: - Cross-price elasticity of demand measures the responsiveness of change in…

Q: Research has found that an increase in the price of beer would reduce the amount of marijuana…

A: Demand is the willingness and ability of consumers for consuming and buying goods and services at…

Q: If Good C increases in price by 3030% a pound, and this causes the quantity demanded for Good D to…

A: The elasticity of demand is the responsiveness from the part of the consumer towards the changes in…

Q: If Good C increases in price by 30% a pound, and this causes the quantity demanded for Good D to…

A: Suppose there are two goods: good 1 and good 2. The cross-price elasticity of demand measures the…

Q: When a negative income elasticity for a good results in income increases leading to a decline in…

A: Income elasticity of demand measures the responsiveness of change in demand due to change in income…

Q: Respond to the following in a minimum of 175 words: Compare and contrast the price elasticity of…

A: Elasticity measures the responsiveness of quantity to other variables. The price elasticity of…

Q: When determining whether two goods are complements you would look for a cross-elasticity of demand.

A: Cross-price elasticity determines the percentage change in quantity demanded of a good due to a…

Q: If the cross-price elasticity of demand for good A when the price of B changes is negative that…

A: A negative cross-price elasticity of demand indicates that good A and good B have an inverse…

Q: Give two examples of elasticity information for two particular goods: one with an elastic demand and…

A: The price elasticity of demand measures the change in demand of a good or service in response to a…

Q: f the cross-price elasticity of demand of two goods is 2.5, what would the two goods be? Question…

A: cross price elasticity of demand is the ratio of percentage change in quantity demanded of good one…

Question

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Prove that price elasticity of demand is not the same as the slope of a demand curve.
Using the following equation for the demand for a good or service, calculate the price elasticity of demand (using the point form), cross-price elasticity with good x and income elasticity. Q=82P+0.10I+Px Q is quantity demanded, P is the product price. P1 is the price of a related good, and I is income. Assume that P= $10, I = 100, and Px = 20.
As the price of good X rises from 10 to 12, the quantity demanded of good Y rises from 100 units to 114 units. Are X and Y substitutes or complements? What is the cross elasticity of demand?
Estimates presented in Exhibit 5 show that Android users have a higher price elasticity of demand for apps in the Google Play Store than do iPhone users in the Apple App Store. Why might Android users tend to be more sensitive to app prices than iPhone users? What categories or types of apps (for example, games/social media) do you think have the highest price elasticities?
The quantity demanded of good X rises from 130 to 145units as income rises from 2,000 to 2,500 a month. What is the income elasticity of demand for good X?
Suppose a straight-line downward-sloping demand curve shifts rightward. Is the price elasticity of demand higher, lower, or the same between any two prices on the new (higher) demand curve than on the old (lower) demand curve?