QUESTION 7 Refer to the information provided in Figure 5.5 below to answer the question that follows. $4 Price per unit D₁ Units of good Y Figure 5.5 D₂ Refer to Figure 5.5. As the price of good W increased, the demand for good Y shifted from D₁ to D2. The cross-price elasticity of demand between Wand Y is positive. negative. zero. indeterminate from this information.

QUESTION 7 Refer to the information provided in Figure 5.5 below to answer the question that follows. $4 Price per unit D₁ Units of good Y Figure 5.5 D₂ Refer to Figure 5.5. As the price of good W increased, the demand for good Y shifted from D₁ to D2. The cross-price elasticity of demand between Wand Y is positive. negative. zero. indeterminate from this information.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Respond to the following in a minimum of 175 words: Compare and contrast the price elasticity of supply and price elasticity of demand. Define income elasticity and how it distinguishes normal and inferior goods. How do you think income elasticity affects a normal good versus an inferior good? Provide a real-world example.
Suppose the own price elasticity of demand for good X is −2, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is −6. Determine how much the consumption of this good will change if:Instructions: Enter your responses as percentages. If you are entering a negative number, be sure to use a (−) sign.a. The price of good X decreases by 5 percent. percentb. The price of good Y increases by 10 percent. percentc. Advertising decreases by 2 percent. percentd. Income increases by 3 percent. percent
Match each of the terms to their definition or description. (NOTE: This question is in reference to Cross-Price Elasticity and Income Elasticity.) Complements Inferior good Normal Good Substitutes A. as incomes increase, demand decreases; Income elasticity less than zero B. goods that have a cross-price elasticity less than zero C. as incomes increase, demand increases; Income elasticity greater than zero D. goods that have a cross-price elasticity greater than zero
(2) Show graphically and explain intuitively why price elasticity of demand varies along a linear demand curve.
Assume the market demand for tuna cans may be written as Qtc = 45 - 2 x Ptc + Psc+ 0.3y (where Ptc = price of tuna cans and Psc = price of sardine cans, and y = income). Further assume that both tuna cans and sardine cans sell for $1 and income is $25. Calculate cross - price elasticity for tuna cans and identify whether the goods are substitutes or complements.
3) When is demand said to be inelastic? a) when the quantity demanded changes proportionately more than price b) when the quantity demanded changes proportionately more than income c) when the quantity demanded changes proportionately less than price d) when the quantity demanded changes proportionately less than income 4) Suppose there is a 3 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. What is the price elasticity of demand for X? a) 0 b) 2 c) 6 d) infinite
suppose the demand curve for a product is given by Q=10-2P+Ps1,where P is the price of the product and Ps is the price of a substitute good. the price of the substitute good is $2.00. a)suppose P=$1.00, what is the price elasticity of demand?what is the cross- price elasticity of demand? b)suppose the price of the good, P, increases to $2.00. Now what is the price elasticity of demand, and what is the cross-prices elasticity of demand?