Question1) -The perce the price of good Y is 10 percent. It follows that the and

Question

Question1) -The perce the price of good Y is 10 percent. It follows that the and that the two goods are ntage change in the quantity demanded of good X is20 percent and the percentage change in elasticity of demand is a) Income; 0.50; substitutes b) Cross; 2.00; complements c) Cross;0.50; substitutes d) Cross; 2.00; substitutes e) Price; 2.00, substitutes If for good Z income elasticity is greater than 1, then demand for good Z is income good Z is a (n)-- good. and a) Inelastic; normal b) Inelastic; inferior c) Elastic; normal d) Elastic; inferior Question 2)

Explanation / Answer

Q1

Answer

the cross-price elasticity of demand=%change in quantity/%change in price

=10/20=0.5

The elasticity is positive so the goods are substitutes

Option c

Q2

Answer

option c

the elasticity is above 1 so the demand is elastic and the elasticity is positive so the good is normal

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