Question 17 Not yet answered Points out of 1.00 P Flag question Suppose that the

Question

Question 17 Not yet answered Points out of 1.00 P Flag question Suppose that the price of product X rises by 20 percent and the quantity supplied of X increases by 25 percent. The coefficient of price elasticity of supply for good X is: Select one: O a. less than 1 and therefore supply is inelastic. O b. more than 1 and therefore supply is elastic. O c. less than 1 and therefore X Is an inferior good d.more than 1 and therefore X is a normal good. O Question 18 Not yet answered Paints out of 1.00 Flag question The formula for cross elasticity of demand is percentage change in Select one 0 a, quantity demanded ofX/percentage change in price of Y o b. price of X/percentage change in quantity demanded of y Ocquantity demanded of Xpercentage change in price of x d. quantity demanded of X/percentege change in income

Explanation / Answer

17. Elasticity of supply = % change in quantity supplied / % change in price

= 25/20 = 5/4 = 1.25

So, b) more than 1 and therefore supply is elastic.

18. Cross price Ed = % change in quantity demanded of good X / % change in price of good Y

Answer is a) quantity demanded of X / Percentage change in price of Y

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.