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What is the cross elasticity of demand if two commodities are substitute and if two commodites are complement of each other?
Wiki User
∙ 12y ago
cross effect is positive in substitution effect and negative in complementry goods
Wiki User
∙ 12y ago
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What is a true statementregarding the price elasticity of demand?
Price elasticity of demand is positively correlated with the existence of substitute goods.
How substitutes affect elasticity?
Because elasticity means when the demand is changing. a subsitute consumer in choice of theory. the substiture affects elasticity is it changes over time. substitute is choice and elasticity is demand. put those together and you have a fair deal with your money.
Determinants of own price elasticity of demand?
1. Number of Substitute Products - the greater the number of substitute products, the greater is its own price elasticity of demand. 2. Price of Product Relative to consumers income - the greater the price of product relative to consumers income the greater is it Price Elasticity. 3. Nature of Goods - whether it is luxury good or necessity goods. 4. Passage of Time - the longer the time lapsed the greater Price Elasticity. Hope this answer helps... :)
Importance of cross elasticity of demand?
Cross elasticity of demand is sometimes written as XED. In business the cross elasticity of demand is important because it will help determine whether or not it is a good move to increase or decrease prices or to substitute one product for another for the purpose of revenue.
What do you call a good whose income elasticity is less elasticity of demand?
A. Explain whether demand would tend to be more or less elastic for each of the following three determinants of elasticity demand.1. Availability of substitute goods2. Share of consumer income devoted to a good3. Consumer's time horizon
What is a true statementregarding the price elasticity of demand?
Price elasticity of demand is positively correlated with the existence of substitute goods.
How does substitutes affect elasticity?
Because elasticity means when the demand is changing. a subsitute consumer in choice of theory. the substiture affects elasticity is it changes over time. substitute is choice and elasticity is demand. put those together and you have a fair deal with your money.
How substitutes affect elasticity?
Because elasticity means when the demand is changing. a subsitute consumer in choice of theory. the substiture affects elasticity is it changes over time. substitute is choice and elasticity is demand. put those together and you have a fair deal with your money.
Determinants of own price elasticity of demand?
1. Number of Substitute Products - the greater the number of substitute products, the greater is its own price elasticity of demand. 2. Price of Product Relative to consumers income - the greater the price of product relative to consumers income the greater is it Price Elasticity. 3. Nature of Goods - whether it is luxury good or necessity goods. 4. Passage of Time - the longer the time lapsed the greater Price Elasticity. Hope this answer helps... :)
Importance of cross elasticity of demand?
Cross elasticity of demand is sometimes written as XED. In business the cross elasticity of demand is important because it will help determine whether or not it is a good move to increase or decrease prices or to substitute one product for another for the purpose of revenue.
What do you call a good whose income elasticity is less elasticity of demand?
A. Explain whether demand would tend to be more or less elastic for each of the following three determinants of elasticity demand.1. Availability of substitute goods2. Share of consumer income devoted to a good3. Consumer's time horizon
Other things equal if a good has more substitute its price elasticity of demand is?
You need to redo the question so that it makes sense there sunshine.
What is close subsitute of a product?
A close substitute of a product is one which can easily replace it - eg margarine is a close substitute of butter. Two products are substitutes if they have a positive cross-elasticity - as the price of one increases, the quantity of the other increases
Is graphite valuable?
As a mineral commodity in relation to other mineral commodities, not especially so. To a manufacturer that depends on graphite and has no substitute mineral, it would be very valuable.
How is lead poisoning treated in alternative medicine?
While changes in diet are no substitute for medical treatment, they can complement the detoxification process. The following nutritional changes are recommended
Describe how the necessity of a good and the availability of substitutions impact price elasticity?
The Necessity of a good and the availability of substitutions impact price elasticity. The definition of Price Elasticity is a measure of responsiveness of some other variable to a change in price (About.com 2009). The higher the price elasticity, the more responsive buyers are to price changes. High price elasticity implies that when the price of something goes up, buyers will buy less of it and when the price of it goes down, they will buy more. Low price elasticity is the opposite, changes in price have little influence on demand.When dealing with price elasticity, consider the changes in prices of substitute goods. When the change of a substitute good occurs, a change in the demand of original goods will be affected in the same direction. For instance, if the price of gelato goes up, gelato eaters will switch to ice-cream. If the price of the substitute good goes down, the gelato is now is now cheaper, consumers buy more gelato instead and the quantity of ice-cream demanded is cut. The price increase of a substitute good increases the quantity demanded of the original good and a decrease in the price of a substitute good causes a decrease in the quantity of original good demanded. (Tomlinson, 2009)REFERENCESTomlinson, Steve. (Speaker). (Year). Economics with Steve Tomlinson Transcript: Understanding Markets Demand [Episode 4.2-1]. . Podcast retrieved from http://custom.cengage.com/static_content/OLC/0324833326/data/transcripts/8353.pdf(2009). About.com. Retrieved October 3, 2009, from http://economics.about.com/od/economicsglossary/g/pricee.htm
Why does demand for substitutes tend to move in the opposite direction from each other?
Answer this question… A. When the price of a good goes up, consumers shift their demand to its substitute. B. Substitute goods have perfect unit elasticity for each other. C. Substitute goods tend to have inelastic demand. D. One of the substitutes is usually elastic, while the other is inelastic.
