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A cross elasticity of demand coefficient of plus 2.5 indicates that the two products are substitutes?
True or False: A cross elasticity of demand coefficient of +2.5 indicates that the two products are substitutes.
What is the main advantage of using the midpoint method for calculating elasticity?
When we compute price elasticity between any two points on a demand curve, we get a different answer depending on which point we choose to start and which point we choose to finish if we take the change in price and quantity as a percent of the starting value for each. With the midpoint method, the percentage changes in quantity and price are calculated by dividing the change in the variable by the average or midpoint value of the two points on the curve, not the starting point on the curve. In other words, it avoids the problem of getting a different answer when we computer price elasticity between any two points on a demand curve and it calculates by dividing the change in the variable by the midpoint value of the two points on the curve instead of the starting point on the curve. That is the advantage of using the midpoint method for calculating elasticity.
Difference between arc and point elasticity?
1) Point elasticity is measured by the ratio of the lower segment of the curve below the given point to uppa segment the super part of the curve above the point. 2) Arc elasticity is measured by the use of mid point between the old & the new figures in the case of both prine and qualitiy demonded.
What are two items with negative income elasticity of demand?
Margarine has a measured IED of -0.37.
If the value of the cross price elasticity of demand between two goods is approximately zero they are considered?
unrelated
What are the 2 extreme situations of price elasticity of demand?
The two extreme ranges of price elasticity of demand are Zero and Infinity.
A cross elasticity of demand coefficient of plus 2.5 indicates that the two products are substitutes?
True or False: A cross elasticity of demand coefficient of +2.5 indicates that the two products are substitutes.
What is the main advantage of using the midpoint method for calculating elasticity?
When we compute price elasticity between any two points on a demand curve, we get a different answer depending on which point we choose to start and which point we choose to finish if we take the change in price and quantity as a percent of the starting value for each. With the midpoint method, the percentage changes in quantity and price are calculated by dividing the change in the variable by the average or midpoint value of the two points on the curve, not the starting point on the curve. In other words, it avoids the problem of getting a different answer when we computer price elasticity between any two points on a demand curve and it calculates by dividing the change in the variable by the midpoint value of the two points on the curve instead of the starting point on the curve. That is the advantage of using the midpoint method for calculating elasticity.
Difference between arc and point elasticity?
1) Point elasticity is measured by the ratio of the lower segment of the curve below the given point to uppa segment the super part of the curve above the point. 2) Arc elasticity is measured by the use of mid point between the old & the new figures in the case of both prine and qualitiy demonded.
What are two items with negative income elasticity of demand?
Margarine has a measured IED of -0.37.
If two goods are complements their cross elasticity of demand will normally be?
No! That's why I came here! B======D --- --- --- --- (=^_^=)
If the value of the cross price elasticity of demand between two goods is approximately zero they are considered?
unrelated
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.
Two customer go to the fish counter at a supermarket to buy some fish.Neither looks at the price.Customer B orders RN30 worth.what is the price elasticity of demand for fish of each customer?
This information is not enough to determine the price elasticity of demand. If neither of the customers looks at the price, then fish is perfectly has a very low elasticity of demand. It means that consumers will buy fish regardless of price increase. This is however not the case for fish, which is quickly substituted.
What is the cross elasticity of demand if two commodities are substitute and if two commodites are complement of each other?
cross effect is positive in substitution effect and negative in complementry goods
How do you show that in a two good world neither good is inferior?
If the income elasticity of demand is negative for both goods, then they are both not inferior goods.
How might you determine whether the pre-recorded music disk and mp3 players are in competition with each other?
We can use Cross- Elasticity of Demand to determine if the pre-recorded music compact discs and MP3 music players are in competition with each other.Cross- Elasticity of Demand between X and Y= % Change of Demand of goods X / % Change Price of good Y.In this case, X and Y can be said to represent Compact discs and MP3 player. If the cross elasticity of demand is positive, the two commodities being studied are considered to be substitutes for each other. In the case of MP3 player and Compact disc player, they are close substitutes for each other.When cross elasticity of demand is negative, the goods are said to be complementary
