Assume you have an income of $200 and you can only purchase two goods – good A and good B
If the price of good A and B are $1 and $2 how much of each good can purchase? Assume that the price of good A falls why would you now consider not only consuming more of good A but also more of good B? What's going on that might cause this behavioral response?
You can purchase 200 units of good A and 100 units of good B. If the price of good Afell you not only would be interested in buying more of good A but you may also wishto purchase more of good B as well since you now have more real income because of good A's price decline.
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What will be an ideal response?
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When the price of tacos went from $2 to $3 dollars each, the quantity demanded of burritos changed from 100 to 120 a day. The cross-price elasticity of demand for burritos calculated using the initial value method is:
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