Consider the market for flowers. ED should be Positive or Negative? ES should be
ID: 1240840 • Letter: C
Question
Consider the market for flowers. ED should be Positive or Negative? ES should be Positive or Negative? INTERPRET |ED| = 2.5 Is ED Elastic or Inelastic? Which is greater: |% Delta QD| or |% Delta P|? From ED, can you determine whether the good is normal or inferior? From ED, can you determine whether the good is a luxury or a necessity? If the answers for (6) or (7) were yes, then identify such specifics of this good: INTERPRET |ES| = 3.0 Is ED Elastic or Inelastic? Which is greater: |% Delta QS| or |% Delta P|? On average, people buy flowers when they have more or less income? Thus, flowers are Normal or Inferior? And their YD should be Positive or Negative? Assume YD = 0.8 for flowers. Fully interpret the coefficient: Are flowers a Normal or Inferior good? Is the YD response Elastic or Inelastic? Are flowers a necessity or luxury (only answer if they are a normal good)? Consider related markets. Are flowers and vases complements or substitutes? Should the XD for flowers and vases be Positive or Negative? Assume XD = -0.4 (in the market for flowers when the price of vases changes). Fully interpret the coefficient: Are fresh flowers and artificial flowers complements or substitutes? Should the XD for fresh and artificial flowers be Positive or Negative? Assume XD = 0.8 (in the market for fresh flowers when the price of artificial flowers changes). Fully interpret the coefficient:Explanation / Answer
substitute negative xd=0.8 means the demand of fresh flower increases by 0.8 when price of artificial flower increases by 1