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d) There is an increase in income
e) taste increase for the good
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- 20. Cross-price elasticity is used to determine whether goods are: Group of answer choices A. inferior or normal goods B. necessities or luxuries C. none of the answers are correct. D. complements or substitutesOnly typed answer Suppose the price of a good increased from $3 to $4. In response, the consumer has decreased his consumption from 15 units to 10 units. The price elasticity of demand isIn general, the demand for a good will be _________ elastic the ___________ the share of the good in the average consumer's budget. A. Less; smaller B. More; smaller C. Less; larger D. unit; larger
- Question 4The Pear company sells a smart phone for $250. Its sales have averaged 8,000 units per month over the last year. Recently, its closest competitor Banana company reduced the price of its smart phone from $350 to $300. As a result, Pear’s sales declined by 1,500 units per month. (a) What is the cross price elasticity of demand between the Pear and Banana smart phone? Use the averaging formula. What does this indicate about the relationship between the two products? (b) If the Pear company knows that the price elasticity of demand for its phone is -1.5, what price would the Pear company have to charge to sell the same number of units as it did before the Banana company price cut? Assume that Banana company holds its price of its phone constant at $300. Use the averaging formula.Cross-price elasticity of demand measures how a. the price of one good changes in response to a change in the price of another good. b. the quantity demanded of one good changes in response to a change in the quantity demanded of another good. c. the quantity demanded of one good changes in response to a change in the price of another good. d. strongly normal or inferior a good is. Selected Answer:Suppose the price elasticity of demand for used cars is 3. What does this mean?
- If the computed elasticity of the related product is /-0.75/, the good is Select one: a. inferior & elastic b. complement & inelastic c. normal & inelastic d. substitute & elasticA 12 percent increase in the price of tea causes 3 percent increase in the demand for coffee. The cross elasticity of demand for coffee with respect to the price of tea is A -4. B 4. C -0.25 D 0.2506. If demand for this product increased from D1 to D2 as a result of a decrease in price of a related product, then these two products are a) complements. b) substitutes. c) inferior goods. d) public goods. e) economic goods.
- Multiple Choice 5. The cross elasticity of demand for a substitute is ____________.Select one:a.equal to zerob.equal to onec.greater than zerod.less than zero6. Factors that influence the elasticity of demand include all of the following except ____________.Select one: a.time elapsed since a price change b.closeness of substitutes c.the elasticity of supply d.proportion of income spent on the good 7. Which of the following factors would result in a good having an elastic demand?Select one: a.The price of the good is low relative to a consumer's income b.The good is a luxury c.The time between the change in price and consumption of the good is short. d.There are few substitutes for the good8. A 1% increase in the price of good B leads to a 2% decrease in the demand for good A. The cross elasticity of demand is...Select one: a.1/2 b.-2 c.(-1/2) d.2 9. Price elasticity of demand measures...Select one: a.None of the other choices b.How responsive the quantity demanded for a good is to a…Q-1 if the quantity demanded of good A has increased from 8 to 18 units due to the decrease in the price of good B from RO 6 to 4. Calculate the Cross-price elasticity (Eab) and show the relationship between both commodities.Income elasticity of demand (YED): Definition Calculations Significance of the sign Normal goods and Inferior goods
