Question

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 B.0.2 C. 1.7 D. 1.3

Answer 1

Q5
Answer
Option A
complement goods
the elasticity is negative so the goods are complements means the price of a good and quantity of other goods is inversely related.
substitute goods elasticity is positive.
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Q6
Answer
Option A

The elasticity is positive so the good is normal good
the elasticity is negative then the good is inferior
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Q7
Answer
Option c
the elasticity of supply =%change in quantity/%change in price
=25/15
=1.66666667
=1.7

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Q8
Answer
Option B
elastic
As the elasticity is above 1 so the supply is elastic as the change in price has more change in quantity in percentage term.