[amp_mcq option1=”cross price elasticity of demand” option2=”income elasticity of demand” option3=”price elasticity of supply” option4=”cost elasticity of supply” correct=”option1″]<\/p>\n
The correct answer is A. cross price elasticity of demand.<\/p>\n
The cross-price elasticity of demand is a measure of how the demand for a good responds to a change in the price of another good. It is calculated as the percentage change in the quantity demanded of good $x$ divided by the percentage change in the price of good $y$.<\/p>\n
A positive cross-price elasticity of demand indicates that the two goods are substitutes. This means that when the price of good $y$ increases, consumers will demand more of good $x$, since it is now a relatively cheaper alternative.<\/p>\n
A negative cross-price elasticity of demand indicates that the two goods are complements. This means that when the price of good $y$ increases, consumers will demand less of good $x$, since it is now a relatively more expensive good to consume with good $y$.<\/p>\n
B. income elasticity of demand is a measure of how the demand for a good responds to a change in income. It is calculated as the percentage change in the quantity demanded of good $x$ divided by the percentage change in income.<\/p>\n
A positive income elasticity of demand indicates that the good is a normal good. This means that when income increases, consumers will demand more of the good.<\/p>\n
A negative income elasticity of demand indicates that the good is an inferior good. This means that when income increases, consumers will demand less of the good.<\/p>\n
C. price elasticity of supply is a measure of how the quantity supplied of a good responds to a change in the price of the good. It is calculated as the percentage change in the quantity supplied of good $x$ divided by the percentage change in the price of good $x$.<\/p>\n
A positive price elasticity of supply indicates that the good is a relatively elastic good. This means that a small change in the price of the good will lead to a large change in the quantity supplied.<\/p>\n
A negative price elasticity of supply indicates that the good is a relatively inelastic good. This means that a large change in the price of the good will lead to a small change in the quantity supplied.<\/p>\n
D. cost elasticity of supply is a measure of how the quantity supplied of a good responds to a change in the cost of production. It is calculated as the percentage change in the quantity supplied of good $x$ divided by the percentage change in the cost of production of good $x$.<\/p>\n
A positive cost elasticity of supply indicates that the good is a relatively elastic good. This means that a small change in the cost of production will lead to a large change in the quantity supplied.<\/p>\n
A negative cost elasticity of supply indicates that the good is a relatively inelastic good. This means that a large change in the cost of production will lead to a small change in the quantity supplied.<\/p>\n","protected":false},"excerpt":{"rendered":"
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