If an increase in the supply of good A increases the demand for good B, then A. A and B are substitutes. B. the elasticity of supply for good A is greater than 1. C. A and B are complements. D. the demand for A is price elastic. E. the cross elasticity of supply for good B with respect to the price of good A is positive.
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- The quantity demanded of good X rises from 130 to 145units as income rises from 2,000 to 2,500 a month. What is the income elasticity of demand for good X?If the quantity demanded of widgets drops by 10% in response to a 20% decrease in the price of gadgets: a. Widgets and gadgets are complements, with a cross-price elasticity of demand of -2. b. Widgets and gadgets are substitutes, with a cross-price elasticity of demand of 10. c. Widgets and gadgets are substitutes, with a cross-price elasticity of demand of 2. d. Widgets and gadgets are substitutes, with a cross-price elasticity of demand of 0.5. e. Widgets and gadgets are complements, with a cross-price elasticity of demand of -0.5.B) When the price of Good A is $27, the quantity demanded of Good B is 1,200 units. When the price of Good A falls to $23 the quantity demanded of Good B falls to 800 units. i. Calculate the cross elasticity of demand ii. Are the goods substitutes or complements? Explain your choice. iii. Explain how cross elasticity of demand is used. vi. Explain how income elasticity of demand is used.
- At Mcdonald, as the price of grilled chicken salad increases from $4 to $6 while the quantity demanded of Big Mac rises from 700 to 900 a day. Which of the following is NOT true? A. The cross elasticity of demand is 5/8 B. At Mcdonald, grilled chicken salad and Big Mac are substitutes. C. For every 10% increase in the price of grilled chicken salad, we should expect to see a 6.25% increase in the quantity demanded of Big Mac. D. We can tell from the above information that Big Mac is a normal good. E. none of the aboveThe demand for a good will be less price elastic, Select one: a. The larger is the percentage of income spent on it b. The higher is its price c. The smaller the supply of the good d. The fewer the substitutes available for the good e. The fewer there are complements for the goodThe cross elasticity of demand between siopao and catsup is negative. This tells us that___. a. catsup and siopao are independent goods b. the person calculating the elasticity forgot to include an absolute value sign c. catsup and siopao are substitutes d. catsup and siopao are complements
- If the price of product A falls by 15 percent and the quantity demanded for product B falls by 30 percent, a. find the cross elasticity of demand for these two goods. Show your work. b. Are the products substitutes or complements? Why? c. Are the products weak or strong substitutes or complements? Why? Suppose that Mrs. Baker is currently exhausting her money income by purchasing 10 units of X at a price of $10 each and 8 units of Y at a price of $6 each. The marginal utility of the last unit of X is 30 and for Y is 28. These data suggest that Mrs. Baker should either Three Options: 1. Buy less Y and more X 2. Buy less X and more Y 3. Stay with her current selection. Pick one of the three above options as your answer and justify (explain) your answer below:How will the elasticity of demand be affected in the following cases? A. More substitutes become available. B. The income elasticity decreases.a. Explain what “cross-elasticity of demand” is. b. What is a “substitute good”? Give an example. Does it have a positive or negative cross-elasticity of demand?
- Which is characteristic of a product with elastic demand? A. The good is regarded by consumers as a necessityB. There are a large number of good substitutes for the goodC. Buyers spend a small percentage of their total income on the productD. Consumers have had only a short time period to adjust to changes in price(3) Good X is an inferior good if a decrease in income leads to A. an increase in the supply of good X. B. a decrease in the supply of good X. C. an increase in the demand for good X. D. a decrease in the demand for good X. (4) If the cross-price elasticity between good A & B is negative, we know the goods are: A. inferior goods. B. complements. C. inelastic. D. substitutes.1. The price elasticity of demand for bread A. is computed as the percentage change in quantity demanded of bread divided by the percentage change in price of bread. B. will be higher if there is a new product that is a close substitute for bread. C. will be higher if consumers consider bread to be a necessity. D. All of the above are correct. E. A and B, only