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 it complements .
Its substitute but not its complements .
It complements but not its substitutes
None of these
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 increase 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
According to the law of demand , there is ________ relationship between price and quantity demand .
Positive
Negative
Inverse
Demand is perfectly inelastic when:
Shift is the supply curve results in no change in price .
The good in question has perfect substitutes.
Shift of the supply curve results in no change in quantity demanded .
If goods are complements , definitely their :
Cross elasticities are positive
Cross elasticities are negative
Income elasticities are negative
Income elasticities are positive
A virtual demand curve has :
Unit elasticity
Infinite elasticity
Zero elasticity
Varying elasticity
Cross elasticity of demand is :
Negative for complementary goods .
Negative for substitute goods
Unitary for inferior goods
Unitary for giffen goods
PED =
Percentage change in quantity demanded / Percentage change in Price
Percentage change in demanded / Percentage change in supply
Percentage quantity demanded / Percentage change in Price
Percentage change in quantity demanded / Percentage change in supply
The demand curve in the figure above illustrates a product whose demand has a price elasticity of demand equal to
Zero at all prices
Infinity
Once at all prices
A different amount at different prices .
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
