o C greater than the change in quantity demanded for D2 so D2 is more elastic th
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o C greater than the change in quantity demanded for D2 so D2 is more elastic than D D greater than the change in quantity demanded for D2 so D1 is more elastic than D2 QUESTION 11 Income elasticity of demand Cross-price elasticity of demand with Good Y Price elasticity of supply 0.5 1.5 Refer to the table. From the information in the table, what can you say about good X? In particular, is the demand for Good X rather elastic or inelastic? What does this imply about the TT! Paragraph , Anal ,-,-. T./.e , 3(12pt) Click Sare cnd Submit tosque nd submit Click Sarr All Anauers to saue allansuer Save AlAExplanation / Answer
As the price elasticity of Good X is 2.5 which is more than 1 and as we know that if the price elasticity of demand is greater than 1 then product is termed to be elastic in nature. Thus Product X is elastic in nature which means that a smaller change in price will result in greater change in the quantity demanded of product X.
The cross price elasticity of demand with Good Y is 1.5 , thus it means that the Good Y is a substitute product of X as if the value of cross price elasticity if more than 1 then goods are substitute and when it is negative, the products are complementary.
As the income elasticity of demand is 0.5 thus the product is a normal product as the products which have income elasticity which is low yet positive will be termed as normal products.
The supply of the good is unitary elastic which means that there will be equal proportionate change in the supply of the product if there is a change in the price. His is because the value of price elasticity of supply is 1.
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