Would you expect the cross price elasticity to be positive or negative for the following set of goods?
(a) Hot dogs and hot dog buns.
(b) Gasoline and electric cars.
(c) Coffee and tea
(d) Beer and pretzels
a ) hot dogs and its buns are complement, hence the cross price elasticity will be negative i.e. if the price of the hot dogs increase the demand for the hot dogs buns will decrease.
b) They are substitute hence the cross price elasticity will be positive.
c) Coffee and Tea are also substitute so the cross price elasticity will be positive.
d) beer and pretzels are complement so the cross price elasticity will be negative.
Would you expect the cross price elasticity to be positive or negative for the following set...
Question 2: For each of the following statements, state the relevant elasticity (e.g. price elasticity of demand, price elasticity of supply, income elasticity of demand, cross-price elasticity of demand) and state what its absolute value should be (negative, positive or zero?): Example: Question: The demand for coffee increases when the price of tea increases Answer: the cross-price elasticity of demand for coffee with respect to changes in tea prices is positive a. The demand for cars increases during times of...
For the following pairs of goods, would you expect the cross-price elasticity of demand to be positive, negative, or zero? Briefly explain. a) Peanut Butter and Jelly b) Shoes and sandals c) Orange Juice and Apple Juice d) Televisions and DVD players e) T-shirts and gasoline
7. For the following pairs of goods, would you expect the cross-price elasticity of demand to be positive, negative, or zero? Briefly explain. a) Peanut Butter and Jelly b) Shoes and sandals c) Orange Juice and Apple Juice d) Televisions and DVD players e) T-shirts and gasoline
QUESTION 10 The price elasticity of demand for gasoline is -0.25. If we expect the price of gasoline to increase by 8 percent, what is the expected change in the quantity of gasoline demanded? A. Quantity declines by 2 percent B. Quantity declines by 8 percent C. Quantity increases by 2 percent D. Quantity declines by 4 percent QUESTION 11 The income elasticity of demand for bananas is -0.1. Is this good normal or inferior? A. Normal B. Neither normal...
9. The pair of items that is likely to have the largest positive cross-price elasticity of demand is: A) B) C) coffee and tea skis and ski boots. pizza and pepperoni. milk and cookies. D)
Would the cross price elasticity of demand between broccoli and asparagus be positive or negative?
2. Which of the following statements is true? A) The price elasticity of demand is positive when there is an inverse relationship between price and quantity demanded. B) A positive income elasticity indicates that demand for a good rises as consumer income falls C) A positive cross-price elasticity for two goods A and B would arise if A and B were demand complements. D) A negative cross-price elasticity for two goods A and B would arise if A and B...
Explain the cross-price elasticity of demand. Why is it negative or positive for certain types of goods?
You manage a fast-food restaurant. What is the sign of the cross-price elasticity between soft drinks and cheeseburgers? Why might you consider lowering the price of your cheeseburgers? Group of answer choices A. The cross-price elasticity is negative because these goods are substitutes. B. The cross-price elasticity is positive because these goods are complements. C. The cross-price elasticity is positive because these goods are substitutes. D. The cross-price elasticity is negative because these goods are complements.
For which of the following would the price elasticity of demand be greater? a Salt b Beer c Gasoline d Coca-Cola