Consider the demand function Qd = 1000 − 4P2+ 6P*+ 5Y which describes how the demand Qd for a good depends on its price P, the price P* of another good and income Y. Calculate the own-price elasticity, cross price elasticity and income elasticity when P = 10, P* = 20 and Y = 1000. Is demand elastic or inelastic? Are the good complements or substitutes? Is demand normal?

Q: Identify two goods each whose demand exhibits (a) High price elasticity, (b) Low price elasticity,…

A: Price elasticity of demand measures the responsiveness in quantity demanded of a commodity to a…

Q: Given the demand function for good x: Qx = 300 - 2Px + 3Py + 0.02Y, where price Px= 15, price Py =…

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Q: options:   All the other answers are correct   Availability of close substitutes   Whether the…

A: The formula for price elasticity of demand: Elasticity of demand = -∆Q∆P×PQ

Q: Suppose the price elasticity of demand for good A is 1.25. If the price of good A increases by 10%,…

A: Price elasticity of demand is the responsiveness of change in quantity demanded of good due to the…

Q: The price of good X falls by 15 %. As a result, the demand for good Y rises by 30 %. a) What is the…

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A: Answer to the question is as follows :

Q: Which of the following statements are false? (i) The absolute value of the price elasticity of…

A: The measure that depicts the change in quantity being demanded of a good with respect to change in…

Q: of demand

A: The price elasticity of demand is being measured dividing the change of percentage in quantity being…

Q: Suppose the own price elasticity of demand for good X is -5, its income elasticity is 2, its…

A: Price elasticity of demand is given as  Ed= % change in the quantity of good X/ % change 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: X becomes more expensive to produce, increasing its price. As a result, the demand for good Y…

A: Cross elasticity of demand measures the responsive of percentage change in demand due to some…

Q: If demand for a good is highly elastic, that good is likely to have: a. many close complements. b.…

A: A good tends to have a highly elastic demand if it has many close substitutes.

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A: Cross price elasticity of demand shows the change in price of one good will change in demand of…

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

Q: Suppose that initially Px = 2, Py = 8, I 0.5Рх 96 and the Marshallian demand function for %3D 0.51…

A: Given the demand function of good Y:  Y=0.5IPY+0.5PxPY-0.5                  .... (1) Px =2, Py=8 and…

Q: Suppose the own price elasticity of demand for good X is -2 and the price of good X increases by 5…

A: Qwn price elasticity of demand for good X e =  -2 Price of good X increases = 5%

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: If the income elasticity of demand computed using the endpoint method is .5 what term describes…

A: Income elasticity of demand depicts how much consumer responds with the change in his income.…

Q: Suppose the own price elasticity of demand for good X is -5, its income elasticity is 2, its…

A: Cross price elasticity of demand Ec = % change in quantity of good X/ % change in price of good Y

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A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: Suppose the own price elasticity of demand for good X is -5, its income elasticity is 2, its…

A: Income elasticity of demand = % change in the quantity of good X / % change in the income

Q: Suppose that as result of a 10% increase in income, the quantity demanded of Good X increases by…

A: Income elasticity of demand is a measure of sensitiveness of quantity change because of change in…

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

Q: i. Determine the own price elasticity of demand, and state whether demand is elastic, inelastic or…

A: Demand elasticity in connection to prices is a calculation of variation in output demand in…

Q: The value of cross-price elasticity of demand between goods X and Y is 1.25, while the cross-price…

A: Given that , The value of cross price elasticity of demand between goods X and Y is 1.25 , while the…

Q: Suppose that a 10 percent Increase In the price of normal good Y causes a 20 percent decrease In the…

A: If a rise in price of one good decreases the quantity demanded for other, the goods are said to be…

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: Which of the following statements are true? (i) An increase in the number of available substitutes…

A: Answer: The demand for a good is more elastic when there are many substitutes for the good…

Q: Suppose the own price elasticity of demand for good X is -2 and the price of good X increases by 10…

A: own price elasticity of demand for good X e= -2 Price of good increased by = 10%

Q: Suppose that a Demand Curve is given by QY = 10 – 5PY + PX Where QY is the quantity of the good, PY…

A: Answer: Given, Demand curve of good Y: QY=10-5PY+PXWhere,QY=Quantity of good YPY=Price of good…

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…

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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…

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

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Q: Suppose the own price elasticity of demand for good X is –3, its income elasticity is 1, its…

A: a. If the price of good X decreases by 5%, then the change in consumption of good X can be…

Q: Suppose the own price elasticity of demand for good X is -2 and the price of good X increases by 5…

A: Quantity demanded is the quantity for which the consumers are willing to purchase the commodities at…

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: You have the following information about good X and good Y: Income elasticity of demand for good…

A: Income elasticity of demand refers to a percentage change in quantity demanded due to a percentage…

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

A: Price elasticity = [ (Q2 - Q1) / {(Q2 + Q1) / 2} ] / [ (P2 - P1) / {(P2 + P1) / 2} ]

Q: Suppose the own price elasticity of demand for good X is -5, its income elasticity is 2, its…

A: a) Price elasticity of demand is given as  Ed= % change in quantity of good X/ % change in price of…

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A:

Q: Given the demand function Qx= 97.7-2.5Px+3.1Py-2.1Qx, is the quantity demanded, Px is the price of…

A:

Q: The demand for good X depends on the price of good Y: DX = 4 – pX + pY. The supply for good X is SX…

A: Cross price elasticity measures the percentage change in quantity demanded of good 1 when price of…

Elasticity of Demand and Supply

The elasticity of demand and supply are two important concepts of microeconomics. The elasticity of demand measures the responsiveness of consumers’ demands to the price change, changes in income of consumers, and changes in the price of the related goods. Similarly, the elasticity of supply refers to the proportionate change in the quantity supplied due to the proportionate change in the price. In other words, it can be said that elasticity of supply measures how the quantity of supply changes when the price changes of that particular product.