### Budweiser and Heineken:#### Change in Demand and Price:- **Percentage change in demand for Budweiser:** 40%- **Percentage change in price of Heineken:** 10%#### Cross-Price Elasticity:Refer to the following information regarding two goods. Based on the cross-price elasticity of the two goods, would regulators consider the goods to be in the same market?**Answer choices:**1. Yes, because the cross-price elasticity is 4, which means the goods are considered to be complements in the same market.2. Yes, because the cross-price elasticity is 4, which means the goods are considered to be substitutes in the same market.3. Yes, because the cross-price elasticity is 4, which means the goods are not considered to be substitutes in the same market.4. No, because the cross-price elasticity is 4, which means the goods are not considered to be substitutes in the same market.#### Analysis:The text above presents data on the percentage change in demand for Budweiser and the percentage change in price for Heineken. It then asks a question related to cross-price elasticity, which measures the responsiveness of the quantity demanded of one good when the price of another good changes. Based on the data provided, students are to determine whether the goods are complements or substitutes and whether they would be considered to be in the same market. The answer choices provide options for different interpretations of the cross-price elasticity. The correct method is to understand that a positive cross-price elasticity indicates that goods are substitutes, whereas a negative cross-price elasticity means they are complements. Here, a cross-price elasticity of 4 suggests a strong substitution relationship.

In the given scenario, there is a 40% change in the demand for Budweiser and there is a 10% change…

Budweiser and Heineken: % change in demand for Budweiser = 40% % change in price of Heineken = 10% Refer to the following information above regarding two goods. Based on the cross-price elasticity of the two goods would regulators consider the goods to be in the same market? Yes, because the cross price elasticity is 4, which means the goods are considered to be complements in the same market. Yes, because the cross price elasticity is 4, which means the goods are considered to be substitutes in the same market. Yes, because the cross price elasticity is 4, which means the goods are not considered to be substitutes in the same market. No, because the cross price elasticity is 4, which means the goods are not considered to be substitutes in the same market.

Budweiser and Heineken: % change in demand for Budweiser = 40% % change in price of Heineken = 10% Refer to the following information above regarding two goods. Based on the cross-price elasticity of the two goods would regulators consider the goods to be in the same market? Yes, because the cross price elasticity is 4, which means the goods are considered to be complements in the same market. Yes, because the cross price elasticity is 4, which means the goods are considered to be substitutes in the same market. Yes, because the cross price elasticity is 4, which means the goods are not considered to be substitutes in the same market. No, because the cross price elasticity is 4, which means the goods are not considered to be substitutes in the same market.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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