Suppose you notice that the price elasticity of demand for good X is 5.4 and that...
Suppose you notice that the price elasticity of demand for good X is 5.4 and that of good Y is 0.6, what are two of the reasons for difference between the two price elasticities of demand? Be sure to explain which reason applies to which good.
Homework Answers
Price elasticity of demand for X is greater than 0 so the demand is elastic. This is because X is a good with many substitutes or good X can be a luxury. This can also be a fact that good X has a larger share in the budget of consumer.
Price elasticity of demand for Y is less than 0 so the demand is inelastic. This is because X is a good with very few substitutes or good X can be a necessity. This can also be a fact that good X has a very smaller or insignificant share in the budget of consumer.
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Suppose you notice that the price elasticity of demand for good
X is 5.4 and that...
Suppose you notice that the price elasticity of demand for good X is 5.4 and that...
Suppose you notice that the price elasticity of demand for good X is 5.4 and that of good Y is 0.6, what are two of the reasons for difference between the two price elasticities of demand? Be sure to explain which reason applies to which good. Suppose that you own a business and you intend to sell only good X or good Y above. Based only on the information above, will you prefer to sell good X or good Y?...
Suppose the own price elasticity of demand for good X is -2, its income elasticity is...
Suppose the own price elasticity of demand for good X is -2, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is -6. Determine how much the consumption of this good will change if for the following: A) The price of good X decreases by 5 percent. B) The price of good Y increases by 10 percent. C) Advertising decreases by 2 percent. D) Income increases by 3...
Suppose the own price elasticity of demand for good X is -5, its income elasticity is...
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. Instructions: Enter your responses as percentages. Include a minus () sign for all negative answers. a. The price of good X decreases by 5 percent. b. The price of good Yincreases by 8 percent. c. Advertising decreases by...
Suppose the own price elasticity of demand for good X is -3, its income elasticity is...
Suppose the own price elasticity of demand for good X is -3, its income elasticity is 1, its advertising elasticity is 2, 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: 9.16 points Instructions: Enter your responses as percentages. Include a minus (-) sign for all negative answers. a. The price of good X decreases by 5 percent. 15 percent b. The price of good...
Suppose the own price elasticity of demand for good X is -3, its income elasticity is...
Suppose the own price elasticity of demand for good X is -3, its income elasticity is 1, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Yis -4. 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. points a. The price of good X decreases by 5 percent. O percent eBook b. The price of good Yincreases...
14. Suppose the price elasticity of demand is -1.3 for Good A and -2.1 for Good...
14. Suppose the price elasticity of demand is -1.3 for Good A and -2.1 for Good B. Which of the following is consistent with these demand elasticities? a. Good A: Grapes Good B: Fruit b. Good A: Milk over the next year Good B: Milk over the next month c. Good A: Diamond necklaces Good B: Beds d. Good A: Train tickets prior to the invention of automobiles Good B: Train tickets following the invention of automobiles 15. A slightly...
5. The cross-price elasticity of demand between good A and good B is -1.4. These goods...
5. The cross-price elasticity of demand between good A and good B is -1.4. These goods are: A. Complements B. Substitutes C. Unrelated Goods D. Inelastic Goods 6. Income elasticity of demand for streaming video is 0.5, which indicates that streaming video is a: A. Normal good B. Inferior good C. Not good D. Can't say for sure 7. When the price of sriracha increases by 15%, you observe quantity supplied increase by 25%. Elasticity of supply is: A. 0.6...
The cross-price elasticity of demand between good X and good Yis -0.8. Given this information, which...
The cross-price elasticity of demand between good X and good Yis -0.8. Given this information, which of the following statements is true? Goods X and Y are complements. The demand for goods X and Y is income elastic. The demand for goods X and Y is elastic. • Goods X and Y are substitutes. We were unable to transcribe this image
9. Suppose you calculate the price elasticity of demand for a certain good and you report...
9. Suppose you calculate the price elasticity of demand for a certain good and you report that the elasticity 18 V.O. The fact that the elasticity is a positive number means that a. when the price of the good increases, the quantity demanded increases in response. b. demand for the good is elastic. c. you have dropped the minus sign and reported the absolute value of the elasticity d. the good has close substitutes and/or the good is a luxury....
Suppose the cross-price elasticity of demand between goods X and Y is -4. How much would...
Suppose the cross-price elasticity of demand between goods X and Y is -4. How much would the price of good Y have to change in order to change the consumption of good X by 50 percent?
Suppose the own price elasticity of demand for good X is -3, its income elasticity is 1, its advertising elasticity is 2, 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: 9.16 points Instructions: Enter your responses as percentages. Include a minus (-) sign for all negative answers. a. The price of good X decreases by 5 percent. 15 percent b. The price of good...
Suppose the own price elasticity of demand for good X is -3, its income elasticity is 1, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Yis -4. 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. points a. The price of good X decreases by 5 percent. O percent eBook b. The price of good Yincreases...
14. Suppose the price elasticity of demand is -1.3 for Good A and -2.1 for Good B. Which of the following is consistent with these demand elasticities? a. Good A: Grapes Good B: Fruit b. Good A: Milk over the next year Good B: Milk over the next month c. Good A: Diamond necklaces Good B: Beds d. Good A: Train tickets prior to the invention of automobiles Good B: Train tickets following the invention of automobiles 15. A slightly...
5. The cross-price elasticity of demand between good A and good B is -1.4. These goods are: A. Complements B. Substitutes C. Unrelated Goods D. Inelastic Goods 6. Income elasticity of demand for streaming video is 0.5, which indicates that streaming video is a: A. Normal good B. Inferior good C. Not good D. Can't say for sure 7. When the price of sriracha increases by 15%, you observe quantity supplied increase by 25%. Elasticity of supply is: A. 0.6...
The cross-price elasticity of demand between good X and good Yis -0.8. Given this information, which of the following statements is true? Goods X and Y are complements. The demand for goods X and Y is income elastic. The demand for goods X and Y is elastic. • Goods X and Y are substitutes. We were unable to transcribe this image
9. Suppose you calculate the price elasticity of demand for a certain good and you report that the elasticity 18 V.O. The fact that the elasticity is a positive number means that a. when the price of the good increases, the quantity demanded increases in response. b. demand for the good is elastic. c. you have dropped the minus sign and reported the absolute value of the elasticity d. the good has close substitutes and/or the good is a luxury....
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