You have the following information for goods X and Y:
Goods Price elasticity Cross-price elasticity Income elasticity
X -0.5 0.5 0.8
Y -1.8 0.2 -1.2
Fill out the spaces in the following statements:
If the demand is inelastic as in this case, then the revenue gained from the increase in price, outweighs revenue lost due to decrease in quantity. Therefore, Revenue will rise. As for good X price elasticity is less than 1 therefore demand is inelastic.
Similarly if demand is elastic, as in case of good Y as price elasticity is greater than 1, then as increase in price would lead to a decrease in revenue.
Since cross price elasticity is positive, which means that increase in price of Y leads to an increase in quantity demanded of X, therefore the goods are complements.
Income elasticity of Y is negative. Which means that an increase in income leads to a decrease in the quantity demanded of Y,. therefore the good is inferior.
Since income elasticity of Y is positive, therefore an increase in income by 10% would lead to an increase in sales of good X by 8%
An increase in price of X by 10% would lead to a decrease in demand of X by 5% (due to negative price elasticity) and an increase in demand of Y by 2% (due to +cross price elasticity)
You have the following information for goods X and Y: Goods Price elasticity Cross-price elasticity  
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
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...
What so the following elasticites tell you about the goods. A. Elasticity of demand for good X is 4. B. Cross-price elasticity of demand for good X and good Y is -2. C. Income elasticity of Demand for good X is 0.8.
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?
1.) Suppose the price elasticity of demand for bread is 2.00. If the price of bread falls by 10%, the quantity demanded will increase by: a. 2 percent and total expenditures on bread will rise. b. 2 percent and total expenditures on bread will fall. c. 20 percent and total expenditures on bread will rise. d. 20 percent and total expenditures on bread will fall. e. 20 percent and total expenditures on bread will be unchanged. 2.) Suppose that a...
Consider the cross-price elasticities of demand for four pairs of goods: For goods A & B, the cross-price elasticity of demand is -2.0 For goods C&D, the cross-price elasticity of demand is -0.5 For goods E & F, the cross-price elasticity of demand is 1.5 For goods G & H, the cross-price elasticity of demand is 0.2 Which pair of goods are close (strong) substitutes? A&B C&D E&F G&H
A.) Suppose the price elasticity of demand for bread is 2.00. If the price of bread falls by 10%, the quantity demanded will increase by: B.) Suppose that a 10% increase income causes a 20% increase in demand for good X. The coefficient of the income elasticity of demand is: C.) The price of a weekly magazine decreases from $1.90 to $1.50. The quantity demanded increases from 100,000 to 200,000 copies. The price elasticity of demand in this range is:...
the cross price of good x with respect to the price of good y has been estimated as being equal to -0.2. this implies that both goods are normal goods good y and good x are comlpements one of the two goods is inferior while the other is normal but we need additional information to determine which of them is inferior good y and good x are substitutes
In Pioneer Ville, the price elasticity of demand for bus rides is 0.8, the income elasticity of bus rides is -1.2 and cross price elasticity of demand for bus rides with respect to gasoline is 1.1. a) Is the demand for bus rides elastic or inelastic? Why? b) Would an increase in the price of bus rides increase the bus companys total revenue? Explain your answer. c) If incomes increase by 5 percent with no change in prices, how will...
22. Consider two imaginary goods, widgets and gadgets. The cross-price elasticity of demand for widgets with respect to the price of gadgets is +0.5. This tells us that widgets and gadgets are a. Compliments b. Substitutes c. Unrelated in consumption For this condition to hold, 23. Assume that the market demand for widgets is perfectly inelastic. a. There must be no good substitute for widgets, and widgets must be a normal good. b. There must be no good substitute for...