Question

In: Economics

For each scenario, calculate the cross-price elasticity between the two goods and identify how the goods...

For each scenario, calculate the cross-price elasticity between the two goods and identify how the goods are related. Please use the midpoint method when applicable, and specify answers to one decimal place.

A 20%20% price increase for Product A causes a 10%10% decrease in its quantity demanded, but no change in the quantity demanded for Product B.

cross-price elasticity between A and B:

relationship between A and B:

no relationship

Product C increases in price from $5$5 a pound to $11$11 a pound. This causes the quantity demanded for Product D to increase from 1010 units to 1818 units.

cross-price elasticity between C and D:

relationship between C and D:

substitutes

When the price of Product E decreases 9%9%, this causes its quantity demanded to increase by 14%14% and the quantity demanded for Product F to increase 12%12%.

cross-price elasticity between E and F:

relationship between E and F:

complements

Expert Solution

Cross price elasticity = percentage change in quantity of X/Percentage change in price of Y

1) A 20% price increase for Product A causes a 10% decrease in its quantity demanded, but no change in the quantity demanded for Product B.

cross-price elasticity between A and B: 0/20% = 0

relationship between A and B:No relation

2) Product C increases in price from $5 a pound to $11 a pound. This causes the quantity demanded for Product D to increase from 10 units to 18 units.

cross-price elasticity between C and D: [18-10/(18+10/2)] / [11-5/(11+5/2)] = (8/14) / (6/8) = 0.5714/0.75 = 0.76

relationship between C and D: Substitute as the elasticity is positive

3)When the price of Product E decreases 9%, this causes its quantity demanded to increase by 14% and the quantity demanded for Product F to increase 12%.

cross-price elasticity between E and F:12%/-9% = -1.33

relationship between E and F: complements as the elasticity is negative.

Rahul Sunny answered 1 year ago

Calculate the cross -price elasticity between the two go8ds and identify how the goos are related....

Calculate the cross -price elasticity between the two go8ds and identify how the goos are related. A 20% price increase for product a causes a 10% decrease inits quantity demaned for product b / product c increases in price from $ 3 a pound to $ 4 a pound. This causes the quantity demed for product d to lncrease from 44 units to 85 units. /WHEN THE PRICE OF PRODUCT E DECREASES 9% THIS CAUSES ITS QUANITY DEMANDED TO INCREASE...

The cross-price elasticity between two products is estimated to be 3. If the price of the...

The cross-price elasticity between two products is estimated to be 3. If the price of the first product is decreased by 3.9%, demand for the second product will change by_____%. Hint: Round to the second decimal. Answers are in percentages and can be positive or negative. If you calculate .0151 then input the answer as 1.51. Assume that the price and income elasticities of demand for luxury cars are EP = –0.52 and EY = 3.2 respectively. In the coming...

Cross Price Elasticity of Demand: How can we use cross price elasticity to determine whether two...

Cross Price Elasticity of Demand: How can we use cross price elasticity to determine whether two goods are substitutes or compliments?

You have the following information for goods X and Y: Goods Price elasticity Cross-price elasticity Income...

You have the following information for goods X and Y: Goods Price elasticity Cross-price elasticity Income elasticity X 0.4 -0.7 -1.8 Y 0.9 -0.7 0.6 Fill out the spaces in the following statements: Based on the price elasticity, we can say that good X is price ___________________ Based on the cross-price elasticity, we can say that goods X and Y are _______________ Based on the income elasticity, we can say that good Y is _________________

2) A negative value for the cross elasticity of demand between two goods indicates that A)...

2) A negative value for the cross elasticity of demand between two goods indicates that A) each good is price inelastic. B) the goods are substitutes. C) one of the goods is normal and the other is inferior. D) the goods are complements 4) Marginal benefit is the benefit one more unit of the good and of the good increases. A) of producing; decreases as production B) of producing; increases as production C) from consuming; increases as consumption...

Two goods are _______ if their cross-price elasticity is 0.5. A good is a(n) good if its income elasticity of demand is 0.5.

Two goods are _____________ if their cross-price elasticity is 0.5. A good is a(n) ______ good if its income elasticity of demand is 0.5.Group of answer choices：Weak substitutes: NecessityClose substitutes: LuxuryWeak complements: NormalClose complements: Inferior

6. Describe the cross elasticity of demand between two goods that are substitutes? what happens when...

6. Describe the cross elasticity of demand between two goods that are substitutes? what happens when the two goods are complements? (10 points)

If the cross-price elasticity of demand between Good A and Good B is 3, the price...

If the cross-price elasticity of demand between Good A and Good B is 3, the price of Good B increases, and the price elasticity of demand for Good B is inelastic, we can expect to see a(n) ________ change in the quantity demanded for Good A. large infinite zero small one-for-one

if the cross-price elasticity between ketchup and hamburgers is -1.2, a 4% increase in the price...

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%: a. increase in quantity demanded of ketchup. b. drop in quantity demanded of hamburgers. c. increase in quantity demanded of hamburgers. d. drop in quantity demanded of ketchup.

Determine the price elasticity of demand, the cross-price elasticity of demand or the income elasticity in...

Determine the price elasticity of demand, the cross-price elasticity of demand or the income elasticity in the following scenarios a. Consider the market for coffee. Suppose the price rises from $4 to $6 and quantity demanded falls from 120 to 80. What is price elasticity of demand? Is coffee elastic or inelastic? b. John’s income rises from $20,000 to $22,000 and the quantity of hamburger he buys each week falls from 2 pounds to 1 pound. What his income elasticity? Is hamburger...