(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.

(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.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 8QFR

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(Other Elasticity Measures) Complete each of the following sentences: a. The income elasticity of demand measures, for a given price, the __________ in quantity demanded divided by the __________ income from which it resulted. b. If a decrease in the price of one good causes a decrease in demand for another good, the two goods are __________. c. If the value of the cross-price elasticity of demand between two goods is approximately zero, they are considered __________.
As the price of good X rises from 10 to 12, the quantity demanded of good Y rises from 100 units to 114 units. Are X and Y substitutes or complements? What is the cross elasticity of demand?
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.
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.
State whether the following statements are true or false a. If a product has price elasticity of demand greater than 1 then a rise in the price of the good will lead to a rise in total revenue received. b. A price elasticity of demand of 0.4 means that a 4% increase in price leads to a 10% reduction in the quantity of a good demanded. c. Goods A and B are complementary if a rise in the price of good A leads to a fall in the demand for good B
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
When a good has an income elasticity of demand coefficient of 4.54 the _____. A. good is a normal good and it is income elastic B. good is a normal good and it is income inelastic C. good is an inferior good and it is income elastic D. good is an inferior good and it is income inelastic
The 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
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.
8. If a higher price for good X causes a decrease in the demand for good Y, the cross elasticity value for the two goods would be A. negative. B. equal to zero. C. positive. D. possibly negative, positive, or zero, but there is not enough information to decide.
c. What is a “complementary good”? Give an example. Does it have a positive or negative cross-elasticity of demand? Assume that the price cross elasticity of demand for muffins with respect to the price of coffee is (negative) - 0.7.
The income elasticity of demand is a. always negative. b. always positive. c. negative for a normal good and positive for an inferior good. d. positive for a normal good and negative for an inferior good. Clear my choice