QUESTIONS If the price of Good A decreases from $56 to $48 and the amount of Goo
ID: 2439080 • Letter: Q
Question
QUESTIONS If the price of Good A decreases from $56 to $48 and the amount of Good B consumers choose to buy increases from 36 to 55, what is the cross price elasticity? Do not forget to include the sign. QUESTION 6 What does your answer from the previous question tell you about this good? O These goods are complements. OThese goods are substitutes. QUESTION7 If the price of Good A increases from $65 to $89 and the amount of Good B consumers choose to buy increases from 43 to 53, what is the cross price elasticity? Do not forget to include the sign. QUESTION 8 What does your answer from the previous question tell you about this good? O These goods are complements These goods are substitutes. Click Sove and Submit to sove and submit. Click Save All Answers to sove al answers. Save All Answers oExplanation / Answer
Question – 5
Price of Good A
Quantity of Good B
$56
36
$48
55
Using the midpoint method
Cross price elasticity = ?Q (B)/?P (A) * P1+P2/Q1+Q2
Cross price elasticity = -19 (B)/8 (A) * $56+$48/36+55
Cross price elasticity = -2.71
Question – 6
As the cross elasticity is negative, we can say that the goods are complementary. In case of complementary goods the cross elasticity will be negative.
Question – 7
Price of Good A
Quantity of Good B
$65
43
$89
53
Using the midpoint method
Cross price elasticity = ?Q (B)/?P (A) * P1+P2/Q1+Q2
Cross price elasticity = -10 (B)/-24 (A) * $65+$89/43+53
Cross price elasticity = 0.67
Question – 8
As the cross elasticity is positive, we can say that the goods are substitutes. In case of substitutes goods the cross elasticity will be positive.
Price of Good A
Quantity of Good B
$56
36
$48
55