User Account

All Pages

Absolute values of the cross-price elasticities

Assignment Help Macroeconomics
Reference no: EM131179917

The accompanying table lists the cross-price elasticities of demand for several goods,where the percent quantity change is measured for the first good of the pair, and the percent price change is measured for the second good.

good

Cross-price elasticities of deman

Air-conditioning units and kilowatts of electricity

-0.34

Coke and Pepsi

+0.63

High-fuel-consuming sport-utility vehicles (SUVs)and gasoline

-0.28

McDonald's burgers and Burger King burgers

+0.82

Butter and margarine

+1.54

a. Explain the sign of each of the cross-price elasticities. What does it imply about the relationshipbetween the two goods in question?

b. Compare the absolute values of the cross-price elasticities and explain their magnitudes. Forexample, why is the cross-price elasticity of McDonald's burgers and Burger King burgers less than thecross-price elasticity of butter and margarine?

c. Use the information in the table to calculate how a 5% increase in the price of Pepsi affects thequantity of Coke demanded.

d. Use the information in the table to calculate how a 10% decrease in the price of gasoline affects thequantity of SUVs demanded.

Reference no: EM131179917

Questions Cloud

Calculate the shear stress on the plate at rest and flow : Calculate the shear stress on the plate at rest and the flow rate per unit width between the plates.
Fundamental framework for global development : The Millennium Development Goals provide a fundamental framework for global development. Based on data contained in the Millennium Development Goals Report 2015 (available online at http://www.un.org/millenniumgoals/) it is revealed that significa..
Estimate the price elasticity of demand for product : Assume the price of a good decrease from $10 to $8, leading to a rise in quantity demanded from 475 to 500 units. Using the midpoint elasticity formula, calculate the price elasticity of demand for the good at this price range. Explain why it is i..
Firms are motivated to improve cash flow : Firms are motivated to improve cash flow EXCEPT by: A firm that has small daily cashflows, minimal computer facilities, and untrained treasury personnel, would tend to use a disbursement system that is:
Absolute values of the cross-price elasticities : a. Explain the sign of each of the cross-price elasticities. What does it imply about the relationshipbetween the two goods in question? b. Compare the absolute values of the cross-price elasticities and explain their magnitudes. Forexample, why is..
An indirect cost of financial distress : Which of the following is an indirect cost of financial distress?
What is its self-supporting growth rate : Maggie's Muffins, Inc., generated $2,000,000 in sales during 2013, and its year-end total assets were $1,600,000. Also, at year-end 2013, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and ..
After-tax salvage and the return of working capital : Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,180,000, and it would cost another $16,500 to install it. What is the additional Year-3 cash flow (i.e, the after-tax s..
Impact on price and quantity for new apartments : Melbourne, it is expected that by the end of this year the increase of new apartments into the market will far outstripped any increase in the demand for new apartments. Explain, with demand and supply diagrams, the impact on price and quantity fo..

Reviews

Write a Review

Macroeconomics Questions & Answers

  Illustrate what did the usa do

Illustrate what did the USA do like other countries as well after the first oil price shock.

  What would be the marginal benefits and marginal costs

Identify two government programs, at a national level, that you would definitely change. Explain why and how you would change them. What are the marginal benefits and marginal costs of each changed policy to you

  How the concept that you could affect the us economy

Explain how the concept that you could affect the U.S. economy - Identify at least four key points of a relevant economic article.

  Determine the nash equilibrium warranties

Acura and Volvo offer warranties on the automibiles, where wA is the number of years of an Acura warranty and w - V is the number of years of a Volvo waranty. The revenue for Firm i, i = A for Acura and V for Volvo is TRi=27,000wi / wA +wV. The fi..

  Alculate the economic cost of pursuing the mba

Moreover, she can expect a 5% salary increase each year with this employer. Apply the concept of opportunity cost to calculate the economic cost (as opposed to the accounting cost, which would not factor in opportunity cost) of pursuing the MBA ov..

  Illustrate price as well as quantity will maximize revenue

Illustrate price as well as quantity will maximize revenue. Elucidate the total revenue and price elasticity at this point.

  What is the expected value of the npv

Your company asked you to evaluate two potential projects. These projects are active for 10 years and have no salvage life. What is the expected value of the NPV for each of the projects? What is the standard deviation of the NPV for each of the proj..

  Production and sales of electronic across the globe

Mr. Donald is the CEO in a newly established XY company that deals with the production and sales of electronic across the globe. As an economic consultant, Mr. Donald has approached for a piece of advice on the possible and suitable strategies tha..

  Weighted index of the four investments combined

A second fund includes the same three investments, A, B and C, together with a fourth investment D.The weightings of investments A, B and C are as above, and the weighting of investment D is 50.Over the same period, the weighted index of the four ..

  Audit a national retail chain

Consider this scenario. You work for an auditing company. You have been asked to audit a national retail chain. Select one access device and one instance of application software which could be used by the retail chain to produce documents.

  Correspond to genuine price stability

As best we can tell, responded the central bank governor, the center of the 2 percent inflation target, namely 1 percent, appears to correspond to genuine price stability once the various sources of bias in the CPI are allowed for." An example of ..

  Evaluate the financial performance of the company

Evaluate the financial performance of the company using the information provided in the scenario. Consider all the key drivers of performance, such as company profit or loss for both the short term and long term and how each factor influences mana..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd