You are told that the price elasticity of demand for widgets is -0.75, the income elasticity of widgets is 2, and the cross-price elasticity of widgets and gadgets is 4. Carefully explain what information you can gather from each of these figures
What will be an ideal response?
Demand for this good is inelastic with respect to price. This is a normal good as income elasticity is greater than zero, and it is a luxury/superior good as income elasticity is greater than one. Widgets and gadgets are substitutes, and they are good substitutes because cross-price elasticity is elastic (large).
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Strictly speaking, corporations do not pay taxes
a. True b. False
Economists generally assume that ____ economic growth is better for society
a. slower b. faster c. stable d. declining
A nation can increase its production possibilities by:
A. Shifting resources to produce more consumer goods and less investment goods B. Shifting resources from private goods to public goods C. Improving labor productivity D. Eliminating unemployment
Joe's demand for spring water can be represented as p = 10 - Q (where p is measured in $/gallon and Q is measured in gallons). He recently discovered a spring where water can be obtained free of charge. His consumer surplus from this water is
A) $0. B) $50. C) $100. D) unknown based upon the information provided.