Question

1- How does price elasticity of demand and cross price elasticity of demand differ?

- The price elasticity of demand measures how responsive the quantity demanded for a good is in response to a change in the good's own price, while the cross price elasticity of demand measures how responsive the quantity demanded for a good is in response to a change in the price of another good.

- The price elasticity of demand measures how responsive the quantity demanded for a good is in response to a change in the price of another good, while the cross price elasticity of demand measures how responsive the quantity demanded for a good is in response to a change in the good's own price.

- Price elasticity of demand depends on the number of existing customers, while the cross price elasticity of demand depends on the number of new customers.

- Price elasticity of demand depends on the number of new customers, while the cross price elasticity of demand depends on the number of existing customers.

2- Cross price elasticity of demand is equal to the percentage change in quantity demanded for Product A, divided by:
- The percentage change in quantity demanded of product B.

- The percentage change in price of product B.

- The quantity supplied of product A.

- The quantity supplied of product B.

3- If the cross price elasticity between apples and oranges is 2, which is correct?

- The two goods are complements, and a price increase in one good will cause an increase in the quantity demanded of the other.

- The two goods are independent, and a price increase in one good will cause an increase in the quantity demanded of the other.

- The two goods are substitutes, and a price decrease in one good will cause an increase in the quantity demanded of the other.

- The two goods are substitutes, and a price increase in one good will cause an increase in the quantity demanded of the other.

4- Suppose the income elasticity of demand for toys is +2.00. This means that:

- A 10 percent increase in income will increase the purchase of toys by 20 percent.
- A 10 percent increase in income will increase the purchase of toys by 2 percent.
- A 10 percent increase in income will decrease the purchase of toys by 2 percent.
- Toys are an inferior good.

5- Which type of goods is most adversely affected by recessions?

- Goods for which the income elasticity coefficient is relatively low.
- Goods for which the income elasticity coefficient is relatively high.
- Goods for which the cross-price elasticity coefficient is positive.
- Goods for which the cross-price elasticity coefficient is negative.

6- Cross elasticity of demand measures how sensitive purchases of a specific product are to changes in:
- The price of some other product.
- The price of that same product.
- Income.
- The general price level.

7- We would expect the cross elasticity of demand between Pepsi and Coke to be:
- Positive, indicating normal goods.
- Positive, indicating inferior goods.
- Positive, indicating substitute goods.
- Negative, indicating substitute goods.
8- Suppose that a 20 percent increase in the price of good Y causes a 10 percent decline in the quantity demanded of good X. The coefficient of cross elasticity of demand is:
- Negative and therefore these goods are substitutes.
- Negative and therefore these goods are complements.
- Positive and therefore these goods are substitutes.
- positive and therefore these goods are complements

Answer 1

Step-by-step explanation:

Price elasticity of demand (PED) measures the responsiveness of the quantity demanded of a good to a change in its price, whereas cross-price elasticity of demand (XED) measures the responsiveness of the quantity demanded of one good to a change in the price of another good.

In other words, PED focuses on the effect of changes in price on the demand for a single good, while XED considers the effect of changes in the price of one good on the demand for another good.