Suppose that a 10 percent Increase In the price of normal good Y causes a 20 percent decrease In the quantity demanded of normal good X. The coefficient of cross elasticity of demand is Multiple Cholce negative, and therefore these goods are substitutes. positive, and therefore these goods are substitutes. negative, and therefore these goods are complements. positive, and therefore these goods are complements.

Suppose that a 10 percent Increase In the price of normal good Y causes a 20 percent decrease In the quantity demanded of normal good X. The coefficient of cross elasticity of demand is Multiple Cholce negative, and therefore these goods are substitutes. positive, and therefore these goods are substitutes. negative, and therefore these goods are complements. positive, and therefore these goods are complements.

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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Using the following equation for the demand for a good or service, calculate the price elasticity of demand (using the point form), cross-price elasticity with good x and income elasticity. Q=82P+0.10I+Px Q is quantity demanded, P is the product price. P1 is the price of a related good, and I is income. Assume that P= $10, I = 100, and Px = 20.
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