Question

In: Economics

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 _________________

Solutions

Expert Solution

Based on the price elasticity, we can say that good X is price inelastic.

Based on the cross-price elasticity, we can say that goods X and Y are complementary goods.

Based on the income elasticity, we can say that good Y is a normal good.

Explanation: If the absolute value of price elasticity is less than 1, then it is price inelastic. So, good X is price inelastic.

When the cross-price elasticity of two goods is negative, they are complementary goods. So, that goods X and Y are complementary goods. When the cross-price elasticity of two goods is positive, they are substitutes.

Normal goods have positive income elasticity and inferior goods have negative income elasticity.

Rahul Sunny answered 1 year ago
Next > < Previous

Related Solutions

Which of the following pairs of goods would be expected to have a positive cross-price elasticity...
Which of the following pairs of goods would be expected to have a positive cross-price elasticity of demand? * A) coffee and tea. B) gasoline and cars C) tennis racquets and tennis balls. D) hot dogs and hot dog buns. As the price of socks increases, what would reasonably be expected to happen to the equilibrium price and equilibrium quantity of shoes? (Socks and shoes are complements.) * A) Equilibrium price would increase and equilibrium quantity would decrease. B) Equilibrium...
Which of the following pairs of goods would be expected to have a positive cross-price elasticity...
Which of the following pairs of goods would be expected to have a positive cross-price elasticity of demand? * A) coffee and tea. B) gasoline and cars C) tennis racquets and tennis balls. D) hot dogs and hot dog buns. As the price of socks increases, what would reasonably be expected to happen to the equilibrium price and equilibrium quantity of shoes? (Socks and shoes are complements.) * A) Equilibrium price would increase and equilibrium quantity would decrease. B) Equilibrium...
1)Two good (x and y) are complements. The cross-price elasticity of x with respect to the...
1)Two good (x and y) are complements. The cross-price elasticity of x with respect to the price of y is a. positive. b. negative. c. zero. d. None of the above. 2) For an inferior good, the income and substitution effects a. Work together. b. Work against each other. c. Can work together or in opposition to each other depending upon their relative magnitudes. d. Always exactly cancel each other. 3) Elasticity measures a. The slope of a demand curve....
You have the following information on the price elasticities of the demands for goods Y and...
You have the following information on the price elasticities of the demands for goods Y and X: 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: Consider good Y. A decrease in the price of good Y will ________ total revenues. Based on the price elasticity, we can say that good X is price ______ Based on the cross-price elasticity, we can say that...
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...
A cross price elasticity of demand of -1.5 for Good X and Good Y suggests that...
A cross price elasticity of demand of -1.5 for Good X and Good Y suggests that if the price of of Good X increases by 5.0 percent, then the quantity demanded of Good Y will? A) increases by 7.5 percent and the goods are complements B) decreases by 7.5 percent and the goods are complements C) decreases by 7.5 percent and the goods as substitutes D) increases by 7.5 percent and the goods are substitutes
In the article titled "Price Elasticity, Cross-Price Elasticity, and Income Elasticity in the Market for Alcoholic...
In the article titled "Price Elasticity, Cross-Price Elasticity, and Income Elasticity in the Market for Alcoholic Beverages. The elasticities reported in the article were calculated using price data for many brands of beer. Why might price elasticity estimates for a product be less reliable if they use data for only one brand of that product? Be detailed in your answers, and reference the lesson materials when appropriate. This is in Principles of Microeconomics.
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
Discuss factors affecting the Price Elasticity of Demand, Income Elasticity of Demand, and Cross-price Elasticity of...
Discuss factors affecting the Price Elasticity of Demand, Income Elasticity of Demand, and Cross-price Elasticity of Demand for LUX, a five-star resort in the Maldives. Identify any unique amenities of the resort and forms of transportation to the remote islands. Discuss why forecasting is critical for the success of the one island, one resort concept. Mention the importances of demand (i.e. effective demand, elasticity, inelasticity) and price while tying in with the topic. At least 200 words (important). Thanks in...
ELASICITY What is meant by the terms price elasticity, cross-price elasticity and income elasticity? Explain why...
ELASICITY What is meant by the terms price elasticity, cross-price elasticity and income elasticity? Explain why demand elasticity is the basis of airline pricing and revenue maximization, and why elasticity changes at different price points.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT