Cross elasticity of demand is :
Negative for complementary goods .
Negative for substitute goods
Unitary for inferior goods
None of these
The price elasticity of demand is defined as the absolute value of the ratio of :
Price over quantity demanded
Change in price over change in quantity demanded
Percentage change in quantity demanded over the percentage change in Price
Change in price over change in quantity supply
The demand curve in the figure above illustrates the demand for a product with:
Zero price elasticity of demand at all price .
Infinite price elasticity of demand
Unit price elasticity of demand at all prices
Cross elasticity
When a change in price results in an infinitely large response in quantity demanded ,demand is
Unit elastic
Perfectly inelastic
Perfectly elastic
Elastic
The price elasticity of demand depends on :
The units used to measure price and the units used to measure quantity .
The units used to measure price but not the units used to measure quantity .
The units used to measure quantity but not the units used to measure price .
Neither the units used to measure price nor the units used to measure quantity .
__________ is a measure of the responsiveness of demand for one good to a change in the price of another good and involves demand curve shifts .
Cross price elasticity of demand (XED)
Price elasticity of demand (PED)
Unit elesticity of demand
Price elasticity of supply
Unit elastic demand :
Means that the ratio of change in the quantity demanded to a change in the price equals 1
Means that the ratio of a percentage change in the quantity demanded to a percentage change in the price equals 1
Will be vertical
Will be horizontal
If goods are complements , definitely their :
Cross elasticities are positive
Cross elasticities are negative
Income elasticities are negative
Price elasticities are negative
If demand is price elastic :
A 1 percent decrease in the price leads to increase in the quantity demanded that exceeds 1 percent .
A 1 percent increase in the price leads to an decrease in the quantity demanded that exceeds 1 percent
The price is very sensitive so any shift the supply curve .
A 1 percent decrease in the price leads to an increase in the quantity demanded that exceeds 1 percent
The cross elasticity of demand measures the responsiveness of the quantity demanded of a particular good to changes in the prices of
Its substitute and its complements .
Its substitute but not its complements .
It complements but not its substitutes
