indicator of inferior goods indicator of substitute 1. cross-price elasticity > 0 goods 2. cross-price elasticity < 0 indicator of complementary goods 3. cross-price elasticity = 0 %3D indicator of necessity goods 4. 0< income elasticity < 1 indicator of unrelated 5. income elasticity < 0 goods 6. income elasticity > 1 perfectly elastic 7. vertical supply curve perfectly inelastic 8. horizontal demand curve indicator of luxury goods

indicator of inferior goods indicator of substitute 1. cross-price elasticity > 0 goods 2. cross-price elasticity < 0 indicator of complementary goods 3. cross-price elasticity = 0 %3D indicator of necessity goods 4. 0< income elasticity < 1 indicator of unrelated 5. income elasticity < 0 goods 6. income elasticity > 1 perfectly elastic 7. vertical supply curve perfectly inelastic 8. horizontal demand curve indicator of luxury goods

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 31CTQ: Economists define normal goods as having a positive income elasticity. We can divide normal goods...

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In order to prove that Motrin and Ibuprofen are substitutes, one should measure the ________ and get a ________. cross-price elasticity; positive number price elasticity of demand; number less than 1 (in absolute value) price elasticity of demand; number greater than 1 (in absolute value) cross-price elasticity; negative number
The accompanying table lists the cross-price elasticities of demand for several goods, where the percent quantity change is measured for the first good of the pair, and the percent price change is measured for the second good. ( please see image) a. Explain the sign of each of the cross-price elasticities. What does it imply about the relationship between the two goods in question? b. Compare the absolute values of the cross-price elasticities and explain their magnitudes. For example, why is the cross-price elasticity of McDonald’s burgers and Burger King burgers less than the cross-price elasticity of butter and margarine? c. Use the information in the table to calculate how a 10% increase in the price of Pepsi affects the quantity of Coke demanded. d. Use the information in the table to calculate how a 5% decrease in the price of gasoline affects the quantity of SUVs demanded.
If the cross-price elasticity between ketchup and hamburgers is –1.2, a 4% increase in the price of ketchup will lead to a 4.8%* drop in quantity demanded of ketchup. drop in quantity demanded of hamburgers. increase in quantity demanded of ketchup. Increase in quantity demanded of hamburgers. If the price of pork chops falls from $8 to $6, and this leads to an increase in demand for apple sauce from 100 to 140 jars, what is the cross-price elasticity of apple sauce and pork chops at a pork chop price of $6?* -1.17 2.71 0.42 -0.86 An income elasticity less than zero tells us that the good is:* a normal good. a Giffen good. an inferior good. an inelastic good.
We can divide normal goods into two types: Those whose income elasticity is less than one and those whose income elasticity is greater than one. Think about products that would fall into each category-explain your reasoning for each categorization.
If the price elasticity of demand for used carspriced between $3,000 and $5,000 is 2 1.2 (usingthe mid-point method), what will be the percentchange in quantity demanded when the price of aused car falls from $5,000 to $3,000?
When Alex's income increased from $7,000 to $9,000, he increased his consumption of bagels from 5 to 9 a month and decreased his consumption of donuts from 15 to 9 a month. Calculate Alex's income elasticity of demand for bagels and donuts. >>> Answer to 2 decimal places. >>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign. Alex's income elasticity of demand for bagels is? Alex's income elasticity of demand for donuts is?
When Alex's income was $6,000, he bought 2 bagels and 12 donuts a month. Now his income is $8,000 and he buys 6 bagels and 6 donuts a month. Calculate Alex's income elasticity of demand for bagels and donuts. >>> Answer to 2 decimal places. >>> If your answer is negative, include minus sign. If your answer is positive, do not include a plus sign. Alex's income elasticity of demand for bagels is 2.33. C
The elasticity of demand for beef is -1.2 and the income elasticity for beef is -0.2. Therefore, beef is O normal, substitute inelastic, substitute substitute, inferior elastic, inferior normal, elastic
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The cross price elasticity of demand captures the percent change in the (quantity demanded, price) of one good that results from a percent (quantity demanded, price) of a related good. change in the When the cross price elasticity of demand between two goods is positive, the goods must be (substitutes, complements). When the cross price elasticity of demand between two goods is negative, the goods must be (substitutes, complements).
Suppose the change in the price of good A from $20 to $70 causes the individual's demand for good B to shift from D2 to D1. What is the cross price elasticity? Good A Good B $140 $140 $90 $90 $70 $70 $20 $20 D, D, D, 35 45 35 45 10 70 105 140 10 70 105 140
Cross-price elasticity between robots and drones is - 2.5 when the price of drones drops. Explain what this means in terms of the relationship between the two products. The forecast is that the price of drones will keep dropping - what advice would you have for the robot maker? Why?