cross elasticity of demand

The cross elasticity of demand for substitutes will always be negative because the when the price of product A increases the quantity demanded of product B also increases

• TRUE

• FALSE

1. A 5% rise the price of beef decreased quantity of beef demanded by 10% and increase the quantity demanded of chicken by 15%

(i) Calculate the cross elasticity of demand between beef and chicken

• 1/3

• 3

• 2

• 1/2

If the cross elasticity of demand for product A is zero then product A and Product B are complements

• TRUE

• FALSE

If the cross-price elasticity between two commodities is 1.5,

• the two goods are luxury goods.

• the two goods are complements.

• the two goods are substitutes.

• the two goods are normal goods.

It is reasonable to expect the cross price elasticity of demand for golf clubs and golf balls to be positive

• True

• False

• Uncertain

Why does demand generally become more elastic over time?

• People don't change their shopping behavior over time.

• Few substitutes become available.

• People buy more products over time.

• People have time to find substitutes and change behaviors.

If two goods have negative price cross‑elasticities of demand, the goods are:

• inferior goods.

• luxury goods.

• complementary goods:

• substitute goods.

A 2% price cut for GOOD A causes GOOD B sales to fall by 3%. The price cross elasticity of demand between these goods is roughly _____ and these goods are _____.

• ‑2/3, substitutes.

• 1.5, substitutes.

• 2/3, complements.

• ‑1.5, complements.

What is the relationship between two good if Ex = -2

• Substitutes

• No relationship

• Complements

Complementary goods have:

• the same elasticities of demand.

• very low price elasticities of demand.

• negative cross price elasticities of demand with respect to each other.

• positive cross elasticities of demand.with respect to each other