Cha 68 MICROECONOMICS 10. Explain how using the concept elasticity makes supply
ID: 1153676 • Letter: C
Question
Cha 68 MICROECONOMICS 10. Explain how using the concept elasticity makes supply and demand analysis more useful. 9. What is a complementary good? What is the general value of the cross-price elasticity of demand for a complementary good? What is a substitute good? What is the general value of the cross-price elasticity of demand for a substitute good? MATCHING THE TERMS Match the terons to their definitions 1. complements 2. cross-price elasticity of A measure of the percent change in the quantity demanded divided by the percent change in the price of that good. a h Goods whose consumption decreases when income increases. c. Goods that can be used in place of one another d Goods that are used in conjunction with other goods. e. Goods whose consumption increases with an increase in 3. elastic 4. income elasticity of demand 5. inelastic 6. inferior goods 7. luxury E Quantity responds enormously to changes in price. g, % change in quantity is greater than % change in price. E > 1 h. % change in quantity is less than % change in price. EExplanation / Answer
Answer : 9) Complementary Good : A good is called complementary good when the demand for that good increase in comparison to another good if price increase for that good or you can say if price for another good decrease in comparison to a particular good then the damand for this good decrease but demand for that particuar good increase and here this particular good is known as complementary good.
Cross price elasticity of demand value is negative for complementary good because in case of complementary good if price fall for a good then the demand for that good decrease but the demand for another good increase.
Substitute Good : A good is called substitute good when the price of that good decrease or the price of another good increase in the market then the demand for that particular good increase.
The value of cross price elasticity of demand is positive here because here the demand for a good increase if the price increase for another good.