Other Economics Answers

What does the price elasticity demand measure

You are given the following information about the demand for fresh tomatoes.

Using the midpoint method calculate the price elasticity of demand (using 2 decimal places) for the R30 to R32 price range. The price elasticity of demand for tomatoes is  

Suppose the cross-elasticity of demand between two products, A and B, is positive. If there is a fall in the cost of producing good B, the quantity demanded will

•  A. increase for both goods.
•  B. decrease for good A and increase for good B.
•  C. increase for good A and decrease for good B.
•  D. decrease for both goods.

What type of goods are gas and electricity if the cross elasticity of demand between these two goods are positive?

•  A. complements
•  B. normal goods
•  C. substitutes
•  D. inferior goods

The income elasticity of the demand for shoes is 0,6. Shoes are

•  A. a normal and necessary good.
•  B. a normal but inferior good.
•  C. an inferior and necessary good.
•  D. a normal and luxury good.

If a 10% increase in income causes a 20% increase in the quantity demanded for a good or service. It can be concluded that

•  A. the good or service is a necessity.
•  B. the income elasticity of the demand for the good or service is negative.
•  C. the good or service is a luxury good.
•  D. the price elasticity of the good or service is greater than one.

If a 10% increase in income causes a 20% increase in the quantity demanded for a good or service. It can be concluded that

•  A. the good or service is a necessity.
•  B. the income elasticity of the demand for the good or service is negative.
•  C. the good or service is a luxury good.
•  D. the price elasticity of the good or service is greater than one.