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luda_lava [24]
4 years ago
14

If the cross-price elasticity of demand between two goods is 1.75, then the two goods are:A) complements.B) substitutes.C) luxur

y goods.D) inferior goods
Business
1 answer:
zaharov [31]4 years ago
6 0

Answer:

B) substitutes.

Explanation:

A positive cross-price elasticity of demand means that for an increase in price in one good, there is an increase in demand for the other. This is a typical characteristic of substitute goods, that is, if the price of one good starts rising, the demand for its substitute increases.

The two goods are B) substitutes.

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Read 2 more answers
Suppose the equilibrium price of textbooks is $40 a textbook. At that price, quantity of textbooks demanded and supplied is 20,0
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Answer:

elasticity of demand is 2.16. Consumers pay a smaller portion of the tax

Explanation:

Elasticity of demand measures the responsiveness of quantity demanded to changes in price.

Elasticity of demand = percentage change in quantity demanded / percentage change in price

(2/19)(2/41) = 2.16

When the coefficient of elasticity is greater than 1, demand is elastic.

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Because demand is elastic, more of the burden of the tax falls on producers and consumers pay a small portion of the tax.

I hope my answer helps you

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