When the price of Ford pickup trucks rises from $18,000 to $19,000, the quantity of Chevy trucks demanded increases from 112,000 to 144,000. What is the cross elasticity of demand between Ford and Chevy trucks?
What will be an ideal response?
In this case, the cross elasticity of demand = (percentage change in the quantity of Chevy trucks demanded) ÷ (percentage change in the price of a Ford truck). Use the midpoint method to calculate the percentages. Thus the percentage change in the quantity of Chevy trucks demanded = (144,000 - 112,000 ) ÷ (128,000 ) = 25 percent and the percentage change in the price of a Ford truck is ($19,000 - $18,000 ) ÷ ($18,500 ) = 5.4 percent. The cross elasticity of demand equals (25 percent) ÷ (5.4 percent) = 4.625.
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Which of the following provides the most accurate description of monetary policy?
a. the deliberate control of the money supply to achieve macroeconomic goals b. the use of the government's regulatory powers to improve economic efficiency c. the government provision of goods to improve economic efficiency d. the use of government taxation and expenditures to achieve macroeconomic goals
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A. complements. B. independent goods. C. normal goods. D. substitutes.