Answer to Question #230743 in Microeconomics for Azlan shah

Question

State whether the Statement is TRUE or FALSE. Also write the reason (Without reason your answer will not accepted)

a) If value of cross price elasticity is positive then it means there are less close substitutes are available of that product.

b) In case of luxury products, the own price elasticity of demand is greater than one.

c) If salaries of journalist go up then demand curve of newspaper will shift upward.

d) When price elasticity of supply is greater than one it means supply curve is flatter.

Answer 1

a) False

b) True

Because luxury items are price sensitive, they have a high price elasticity of demand.

c) False

The cost of making newspapers will rise as journalist salaries rise. The market supply will be reduced, and the curve will shift to the left.

d) True The supply curve of a product with high price elasticity of supply is flatter and upward-sloping. A product with poor supply elasticity has a steeper curve.