Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter5: Buying The Necessities
Section: Chapter Questions
Problem 20AA
Related questions
Question
If you have the following information about 3 products ( A ,B,C ). Please answer the questions that follow:
Table (1)
|
Product (A) |
Product (B) |
Product (C) |
Price |
5 |
7 |
4 |
Qd |
14 |
45 |
60 |
If the price of product ( B ) increased from ($ 7 ) to ($ 10 ), then the changes were as follow:
Table (2)
|
Product (A) |
Product (B) |
Product (C) |
Price |
5 |
10 |
4 |
Qd |
12 |
35 |
75 |
- Calculate the cross price elasticity of product ( C ) compared to ( B ). State the type of relation between ( B, C ) ? why ?
- Calculate the
price elasticity of demand for product ( B ) using themid-point formula ? and state the type of elasticity ? Why ? - Is the seller's decision to increase the price of product ( B ) from 7 to 10 correct OR incorrect ? why?
- Without calculation: What is the relationship between product ( B, A )? Why?
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