Calculate the numerical value of cross-price elasticity, exy, in each of the following situations. Do not round your interim calculations before obtaining the final solution (i.e. do not clear your calculator). In each case, express the number to two decimal places and include a negative sign where appropriate 1.e. -1.67, not-1.7 or 1.667) but leave positive values without a plus sign (i.e. 1.67, not +1.67). Identify whether the two products in italics are substitute or complementary products. a. The price Consumer X pays each month for access to the Internet decreases from $50 to $35, causing his quantity demanded of e- magazines he reads on his computer to rise from 4 to 5. The numerical value of cross-price elasticity is The Internet and e-magazines are complementary products. o. The quantity demanded of do-it-yourself hair-cutting sets increases from 5,000 to 15,000 when the average price of a hairstylist's cut rises from $30 to $50 per hour. The numerical value of cross-price elasticity is products. . Do-it-yourself hair-cutting sets and hairstylist's cuts are substitute c. A fall in the average price of smartphones from $550 to $500 increases purchases of smartphone apps from 1 million to 1.3 million per month. The numerical value of cross-price elasticity is . Smartphones and smartphone apps are complementary products.
Calculate the numerical value of cross-price elasticity, exy, in each of the following situations. Do not round your interim calculations before obtaining the final solution (i.e. do not clear your calculator). In each case, express the number to two decimal places and include a negative sign where appropriate 1.e. -1.67, not-1.7 or 1.667) but leave positive values without a plus sign (i.e. 1.67, not +1.67). Identify whether the two products in italics are substitute or complementary products. a. The price Consumer X pays each month for access to the Internet decreases from $50 to $35, causing his quantity demanded of e- magazines he reads on his computer to rise from 4 to 5. The numerical value of cross-price elasticity is The Internet and e-magazines are complementary products. o. The quantity demanded of do-it-yourself hair-cutting sets increases from 5,000 to 15,000 when the average price of a hairstylist's cut rises from $30 to $50 per hour. The numerical value of cross-price elasticity is products. . Do-it-yourself hair-cutting sets and hairstylist's cuts are substitute c. A fall in the average price of smartphones from $550 to $500 increases purchases of smartphone apps from 1 million to 1.3 million per month. The numerical value of cross-price elasticity is . Smartphones and smartphone apps are complementary products.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Calculate the numerical value of cross-price elasticity, exy, in each of the following situations. Do not round your interim calculations before
obtaining the final solution (i.e. do not clear your calculator). In each case, express the number to two decimal places and include a negative sign where appropriate
(i.e. -1.67, not-1.7 or 1.667) but leave positive values without a plus sign (i.e. 1.67, not +1.67). Identify whether the two products in italics are substitute or
complementary products.
a. The price Consumer X pays each month for access to the Internet decreases from $50 to $35, causing his quantity demanded of e-
magazines he reads on his computer to rise from 4 to 5.
The numerical value of cross-price elasticity is
The Internet and e-magazines are complementary
products.
b. The quantity demanded of do-it-yourself hair-cutting sets increases from 5,000 to 15,000 when the average price of a hairstylist's
cut rises from $30 to $50 per hour.
The numerical value of cross-price elasticity is
products.
Do-it-yourself hair-cutting sets and hairstylist's cuts are substitute ✔
c. A fall in the average price of smartphones from $550 to $500 increases purchases of smartphone apps from 1 million to 1.3 million
per month.
The numerical value of cross-price elasticity is
Smartphones and smartphone apps are complementary
products.
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