84-Cross_Price_Elasticity_Key

84-Cross_Price_Elasticity_Key - Student Name: 21 August...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Student Name: 21 August 2010 Total Possible Marks: 15 Cross Price Elasticity of Demand Complete in pen or pencil and hand into your teacher when ready. Each multiple choice question carries one mark. Select one answer only. A quick recap: Cross price elasticity of demand refers to the percentage change in the quantity demanded of a given product due to the percentage change in the price of another "related" product. 1 1. If CPeD > 0 then the two goods are [A]substitutes 1 2. If CPeD =0 then the two goods are [A]independent (i.e. no relationship between the two goods 1 3. If CPeD < 0 then the two goods are [A]complements 2 4. An increase in the price of hot dogs from £1.50 to £2.10 per pound increased the average number of beef burgers demanded per week from 300 to 360 Assuming that all other economic variables were held constant, the cross-price elasticity of demand between hot dogs and beef burgers is [A]+0.5 or 1/2 which indicates that the two goods are [B]substitutes 1 5. A café observed an increase in the demand for its coffee following a rise in the price of a cup of
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

84-Cross_Price_Elasticity_Key - Student Name: 21 August...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online