Question

Please help with these questions:

Question 13 0.2 pts Which one of the following pairs of goods is likely to have a positive cross price elasticity of demand? fries and ketchup onion rings and chicken strips O chocolate ice cream and sprinkles O Pepsi and Coke O ice cream shakes and hamburgers Question 14 0.2 pts When Noelle received a promotion at work, her income rose by 50 percent. The income elasticity of demand for steak was found to be 1.5. For her steak is a(n) O luxury O necessity O inferior good. O substitute for chicken. complement to potatoes. Question 15 0.2 pts What good is most likely to have an income elasticity of demand equal to 8? O a five-star hotel a doctor's visit O toilet paper O used clothing college coursework

Answer 1

Question 13: Option D.

• Cross elasticity of demand or cross-price elasticity of demand measures the responsiveness of the quantity demanded for a good to a change in the price of another good, everything else being equal.
• This means that for a good to have a positive cross elasticity with the other good, it needs to be a perfect substitute.
• Pepsi and coke are perfect substitutes for each other, however other combination of goods are complementary goods which have negative elasticity.

Question 14: Option A

• A positive income elasticity indicates that it is a normal good and not an inferior good, thus option (c) can be ruled out.
• Then it mentions that the elasticity is not less than 1 which means that it is not the necessity, thus option (b) can be ruled out.
• Option (d) and (e) are irrelevant to the question.

Question 15: Option A

• Income elasticity more than 1 means that it is a luxury, and out of all the options only a five star hotel is a luxury; rest all necessities.

Question 16 : Option B