0
Why does the sign of the price elasticity coefficient become negative?
Wiki User
∙ 12y ago
Well if that is... no ones knows But i do know that im awesome and jww is cool
Wiki User
∙ 12y ago
Wiki User
∙ 15y agoecenomics
Add your answer:
Earn +20 pts
Are two goods complements if the cross-elasticity coefficient is negative?
Cross Elasticity Coefficient is defined as when the price of a particular commodity rises how is the demand of another commodity changing. If the goods are complements like say for example petrol and petrol driven cars, if there is a price hike in petrol then demand for petrol cars would fall. Hence a negative cross elasticity of coefficient. On the other hand the demand for deisel cars would rise (given the deisel prices are constant) because they serve as substitutes, and will have a positive cross elasticity.
What does it mean if the price elasticity of demand is 2?
It's an elasticity coefficient of demand: deltaD/deltaP When the coefficient is >1 it is an elastic demand When the coefficient is <1 it is a nonelastic demand
If a demand for a product is elastic the value of the price elasticity coefficient is?
greater than one
Can we use the concept of price elasticity to identify a brand's competitors?
Yes, you can. When the cross-price elasticity between two goods is positive, they are more likely substitutes in consumption; when it is negative, they are more likely complements. A cross-price elasticity of 0 implies no correlation.
Why is the demand curve not representative of price elasticity?
price elasticities are always negative hence brings ambiguities in the demand curve
Are two goods complements if the cross-elasticity coefficient is negative?
Cross Elasticity Coefficient is defined as when the price of a particular commodity rises how is the demand of another commodity changing. If the goods are complements like say for example petrol and petrol driven cars, if there is a price hike in petrol then demand for petrol cars would fall. Hence a negative cross elasticity of coefficient. On the other hand the demand for deisel cars would rise (given the deisel prices are constant) because they serve as substitutes, and will have a positive cross elasticity.
What does it mean if the price elasticity of demand is 2?
It's an elasticity coefficient of demand: deltaD/deltaP When the coefficient is >1 it is an elastic demand When the coefficient is <1 it is a nonelastic demand
If a demand for a product is elastic the value of the price elasticity coefficient is?
greater than one
After computing a elasticity demand and it result was negative what does it implies in economic?
The price elasticity of demand should be negative. This is because the relationship between demand and price, according to the law of demand, is negative.
The price elasticity of demand is the ratio of the?
Change in the demand for a goods and the change in its price. The ratio is negative but the negative sign is usually dropped.
Can we use the concept of price elasticity to identify a brand's competitors?
Yes, you can. When the cross-price elasticity between two goods is positive, they are more likely substitutes in consumption; when it is negative, they are more likely complements. A cross-price elasticity of 0 implies no correlation.
Why is the demand curve not representative of price elasticity?
price elasticities are always negative hence brings ambiguities in the demand curve
What is the relationship between price elasticity of demand and the monopolist's revenue?
marginal revenue is negative where demand is inelastic
What is the price elasticity in a oligopoly?
in oligopoly what is the nature of price elasticity
How income elasticity own price and cross price elasticity are related?
According to the total expenditure method; Ep<1 Price of X increases then the expenditure on X increases. Thus the expenditure and demand on Y decreases. Cross price elasticity of X and Y i s negative, therefore they are compliments. Now Taking Ep>1...we can find out the relation of substitutes. Threfore own price and cross price elasticity is not totally independent of one another.
Do hot dogs and hot dogs buns have positive cross-price elasticity?
Actually, it's negative cross-elasticity because they are complements. i.e the price of one goes up, sales of the other will go down.
Income Elasticity of Supply and Demand?
The price elasticity of supply (or demand) is the percentage change in supply/demand for a one-percentage change in price. Eg, if the price elasticity is 1, a 1% change in the price of a good causes a 1% drop in price. (Note that elasticity is given in absolute value, since it is usually negative.)
