For each of the following pairs of goods, state whether the cross-price elastici
ID: 1138362 • Letter: F
Question
For each of the following pairs of goods, state whether the cross-price elasticity is likely positive, negative, or zero. Explain your answers.
a. Hulu and Netflix.
Close to zero. While they are substitutes they are not close substitutes. Negative. They are complements. Positive. They are close substitutes.
b. Tortilla chips and salsa.
Close to zero. While they are substitutes they are not close substitutes. Negative. They are complements. Positive. They are close substitutes.
c. Movie and popcorn.
Positive. They are close substitutes. Close to zero. While they are substitutes they are not close substitutes. Negative. They are complements.
d. Running shoes and high heels.
Negative. They are complements. Positive. They are close substitutes. Close to zero. While they are substitutes they are not close substitutes.
For each of the following pairs of goods, state whether the cross-price elasticity is likely positive, negative, or zero. Explain your answers.
a. Hulu and Netflix.
Close to zero. While they are substitutes they are not close substitutes. Negative. They are complements. Positive. They are close substitutes.
b. Tortilla chips and salsa.
Close to zero. While they are substitutes they are not close substitutes. Negative. They are complements. Positive. They are close substitutes.
c. Movie and popcorn.
Positive. They are close substitutes. Close to zero. While they are substitutes they are not close substitutes. Negative. They are complements.
d. Running shoes and high heels.
Negative. They are complements. Positive. They are close substitutes. Close to zero. While they are substitutes they are not close substitutes.
For each of the following pairs of goods, state whether the cross-price elasticity is likely positive, negative, or zero. Explain your answers.
a. Hulu and Netflix.
Close to zero. While they are substitutes they are not close substitutes. Negative. They are complements. Positive. They are close substitutes.
b. Tortilla chips and salsa.
Close to zero. While they are substitutes they are not close substitutes. Negative. They are complements. Positive. They are close substitutes.
c. Movie and popcorn.
Positive. They are close substitutes. Close to zero. While they are substitutes they are not close substitutes. Negative. They are complements.
d. Running shoes and high heels.
Negative. They are complements. Positive. They are close substitutes. Close to zero. While they are substitutes they are not close substitutes.
For each of the following pairs of goods, state whether the cross-price elasticity is likely positive, negative, or zero. Explain your answers.
a. Hulu and Netflix.
Close to zero. While they are substitutes they are not close substitutes. Negative. They are complements. Positive. They are close substitutes.
b. Tortilla chips and salsa.
Close to zero. While they are substitutes they are not close substitutes. Negative. They are complements. Positive. They are close substitutes.
c. Movie and popcorn.
Positive. They are close substitutes. Close to zero. While they are substitutes they are not close substitutes. Negative. They are complements.
d. Running shoes and high heels.
Negative. They are complements. Positive. They are close substitutes. Close to zero. While they are substitutes they are not close substitutes.
Close to zero. While they are substitutes they are not close substitutes. Negative. They are complements. Positive. They are close substitutes.
Explanation / Answer
Cross price elasticity of demand measures the response in percentage terms of quantity demanded of a good when the price of its substitute for complement changes by a given percentage. Between two complementary goods the cross price elasticity is negative and between two substitute goods it is always positive. For an related goods it is zero.
a) Positive. They are close substitutes. This is because Hulu is an alternative to Netflix
b) Negative. They are complements. They are consumed together
c) Negative. They are complements.
d) Close to zero. While they are substitutes they are not close substitutes. They are not related.
Related Questions
Hire Me For All Your Tutoring Needs
Integrity-first tutoring: clear explanations, guidance, and feedback.
Drop an Email at
drjack9650@gmail.com
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.