he table below provides elasticity estimates, use them to answer the questions that follow. Type of Elasticity Estimate Price elasticity of demand for uber rides -1.20 Price elasticity of demand for taxis -0.60 Cross-price elasticity of demand for uber and taxis 0.50 Income elasticity of demand for uber rides 0.95 Price elasticity of supply for taxis 0.40 Which of the following is true? a. Uber rides are a normal good and taxis are a substitute for ubers b. Uber rides are an inferior good and taxis are a substitute for ubers c. Uber rides are a normal good and taxis are a complement for ubers d. Uber rides are an inferior good and taxis are a complement for ubers
The table below provides elasticity estimates, use them to answer the questions that follow.
Type of Elasticity Estimate
Price elasticity of demand for taxis -0.60
Cross-price elasticity of demand for uber and taxis 0.50
Income elasticity of demand for uber rides 0.95
Price elasticity of supply for taxis 0.40
Which of the following is true?
a. Uber rides are a normal good and taxis are a substitute for ubers
b. Uber rides are an inferior good and taxis are a substitute for ubers
c. Uber rides are a normal good and taxis are a complement for ubers
d. Uber rides are an inferior good and taxis are a complement for ubers
Cross-price elasticity helps to know the sensitivity in the quantity demanded for an item, from a change in another item's price. The determination of the goods to be complements or substitutes will be based on cross price elasticity. The complements have negative cross price elasticity while substitutes have positive cross price elasticity
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