Suppose that for Tito, the coefficient of cross elasticity of demand between housing and education is -0.56, and for Jasmine, the cross elasticity is +0.75. Based on this information we can conclude that Multiple Choice housing and education are inferior goods for Tito and normal goods for Jasmine. housing and education are normal goods for Tito and inferior goods for Jasmine. housing and education are substitutes for Tito and complements for Jasmine. housing and education are complements for Tito and substitutes for Jasmine.

Suppose that for Tito, the coefficient of cross elasticity of demand between housing and education is -0.56, and for Jasmine, the cross elasticity is +0.75. Based on this information we can conclude that Multiple Choice housing and education are inferior goods for Tito and normal goods for Jasmine. housing and education are normal goods for Tito and inferior goods for Jasmine. housing and education are substitutes for Tito and complements for Jasmine. housing and education are complements for Tito and substitutes for Jasmine.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter6: Demand Relationships Among Goods

Section: Chapter Questions

Problem 6.8P

See similar textbooks

Similar questions

Recent research confirms that the demand for cigarettes is not only inelastic, but it also indicates that smokers with incomes in the lower half of all incomes respond to a given price increase by reducing their purchases by amounts that are more than four times as large as the purchase reductions made by smokers in the upper half of all incomes. How can the income and substitution effects of a price change help explain this finding?
Estimates presented in Exhibit 5 show that Android users have a higher price elasticity of demand for apps in the Google Play Store than do iPhone users in the Apple App Store. Why might Android users tend to be more sensitive to app prices than iPhone users? What categories or types of apps (for example, games/social media) do you think have the highest price elasticities?
Plot the price and quantity data given in the demand schedule of exercise 1. Put price on the vertical axis and quantity on the horizontal axis. Indicate the price elasticity value at each quantity demanded. Explain why the elasticity value gets smaller as you move down the demand curve.
If Andrew would like to buy slippers, he has to check the prices and the number of quantities that will fit to his financial capabilities. If at a price of $220 he can buy 3 slippers, however if he will be given a discount of $50, he would like to buy 5 slippers. Show the value of E using the Price elasticity formula and identify the kinds of E. Let’s see of his capabilities be translated based on his income of $8,000 and an increase of 20% with the same number of slippers. What do you think of his EY and what kind of goods he is capable of buying? On the other hand if changes in price would be interpreted by looking at its cross relationship with same price original and a 35% increase in price due to inflation, but still Andrew, considered the same number of quantities since its Christmas season.
Mel needs your help in understanding the following problem. The price of lettuce has increased slightly from R4.00 to R5.00, causing a fall in the quantities demanded from 100 to 80 per month. However, she also noticed a decrease in the demand for tomatoes, from 150kg to 120kg, even though no price changes have occurred. Can you help her understand this behaviour by seeing if a relationship possibly exists between these two goods? [Hint: Use the elasticity coefficient as a tool for your recommendation. Show all workings. Round your answer to 4 decimal points.]
Assume the market demand for tuna cans may be written as Qtc = 45 - 2 x Ptc + Psc+ 0.3y (where Ptc = price of tuna cans and Psc = price of sardine cans, and y = income). Further assume that both tuna cans and sardine cans sell for $1 and income is $25. Calculate cross - price elasticity for tuna cans and identify whether the goods are substitutes or complements.
When determining whether two goods are complements you would look for a cross-elasticity of demand.
1. Yesterday, the price of gloves was $4 a box, and Reena was willing to buy 10 boxes. Today, the price has gone up to $6 a box, and Reena is now willing to buy 8 boxes. Is Reena's demand for gloves elastic or inelastic? What is Reena's price elasticity of demand? See formula below Price Elesticity of Demand (PED)- Xchange in Q.D. % change in Price
Suppose that a person regards ham and cheese as pure complements—he or she will always use one slice of ham in combination with one slice of cheese to make a ham and cheese sandwich. Suppose also that ham and cheese are the only goods that this person buys, and that bread is free.6.1. If the price of ham is equal to the price of cheese, show that the own-price elasticity of demand for ham is –0.5 and that the cross-price elasticity ofdemand for ham with respect to the price of cheese is also –0.5.6.2. Explain why the results from (6.1) reflect only income effects, not substitution effects. What are the compensated price elasticities in this problem?6.3. Use the results from (6.2) to show how your answers to (6.1) would change if a slice of ham cost twice the price of a slice of cheese.
What is the cross-price elasticity of turkey for these preferences? ax* Cross-price elasticity of turkey : Ex.P, =) ) aPy 2.51 X* 2.5Px+Py P, = $0.50,I = 36, P, = $0.60
Each week John buys exactly 14 bottles of Gatorade drink regardless of its price. Pablo's own price elasticity of demand for the drink is: a) 0 b) -1 c) less than -1 d) more than -1
What would be the income elasticity in the case of the inferior goods