1.The price elasticity of demand measures how sensitive the: a.price is to a cha
ID: 1138137 • Letter: 1
Question
1.The price elasticity of demand measures how sensitive the:
a.price is to a change in the quantity supplied.
b.quantity demanded is to a change in price.
c.demand is to a change in the number of suppliers.
d.price is to a change in quantity demanded.
2.If the cross-price elasticity of demand for two goods is 1.25, then
a.the two goods are luxuries.
b.the two goods are substitutes.
c.one of the goods is normal and the other good is inferior.
a.price is to a change in the quantity supplied.
b.quantity demanded is to a change in price.
c.demand is to a change in the number of suppliers.
d.price is to a change in quantity demanded.
INCOME QUANTITY PURCHASED Coffee 100 Margarine 1 3 $25,000 $50,000 and margarine is found to be_ In the table above the income elasticity for margarine is O A. -1.5,an inferior good OB. 3, an inferior good O C.-1/3, an inferior good O D. 1.5, a normal good O E. we don't have enough information to determine income elasticity for coffeeExplanation / Answer
a) "B"
the quantity demanded is sensitive to the change in the price.
b) "B"
The two good are substitute.
c) The income has increased by 200% but the consumption has increased by 300%. Income elasticity = % change in the quantity / % change in the income
= 300/200
= 1.5, its a normal good. The answer is D.
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