1) A negative cross-elasticity of demand means that the goods in question are _____ while a negative...
Question:
1) A negative cross-elasticity of demand means that the goods in question are _____ while a negative income elasticity means that the good in question is a(n) _____.
substitutes; normal good
substitutes; inferior good
complements; normal good
complements; inferior good
2) Alex finds a new job as an economist at a factory that makes two types of chips: computer and potato. Alex calculates the cross elasticity of demand between computer and potato chips to be a very small negative number. This means:
Computer and potato chips are weak substitutes
Computer and potato chips are weak complements
Computer and potato chips are completely unrelated
Computer and potato chips are strongly related
3) If Aspen Ski Resort offers a 25% discount on ski lift tickets, and the quantity of ski rentals increases by 20%, the cross elasticity of demand is:
0.8 and the two goods are substitutes
-0.8 and the two goods are complements
1.25 and the two goods are substitutes
-1.25 and the two goods are complements
Microeconomics
ISBN: 978-1464187025
2nd edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson