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Consumer buys 10 units of Good A when the price of Good B is $5. When the price of Good B rises to $6 (the price of Good A remaining unchanged) the consumer buys 14 units of Good A.
Part A:
Using an appropriate formula, calculate this Consumer’s cross Elasticity of demand for Good A. Show your working.
Part B:
Is Good A, a substitute for, or a complement to, Good B? Explain your reasoning.
There is a market of computer i.e. there is some demand and supply of computer. Shown in a diagram the effect on the demand and supply curve, the equilibrium price and the equilibrium quantity if “THE SALARIES OF ELECTRONIC TECHNICIAN GO UP”. (Explain also in words).
Part A:
Using an appropriate formula, calculate this Consumer’s cross Elasticity of demand for Good A. Show your working.
Part B:
Is Good A, a substitute for, or a complement to, Good B? Explain your reasoning.
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.
If value of cross price elasticity is positive then it means there are less close substitutes are available of that product
RESPOND URGENT PLEASE
Part A (6 MARKS)
Using an appropriate formula, calculate this Consumer’s cross Elasticity of demand for Good A. Show your working.
Part B (4 MARKS)
Is Good A, a substitute for, or a complement to, Good B? Explain your reasoning.
