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erik [133]
3 years ago
5

If the income elasticity of demand for good X is negative and the cross-price elasticity of demand between good X and good Y is

negative, which of the following must be true of good X
Business
1 answer:
Stella [2.4K]3 years ago
4 0

Answer:

Good X is Inferior Good, Good X is complementary good of Good Y.

Explanation:

Demand : Buyers ability & willingness to buy given price - has 4 factors (price of good, income, price of related goods, Taste).

Based on Income : Normal Goods demand vary directly with Income, more demand at higher income & vice versa. Eg: Normal grains like Wheat, Rice. Inferior Goods demand vary inversely with Income, more demand at lower income & vice versa. Eg: Low grade, cheap grains like Bajra.

Price of Related Goods: Related Goods can be Substitutes or Complements.  Substitute (interchangeable) goods price are directly related a with good's demand because - substitute price rise makes the good relatively cheap, increases its demand & vice versa. Complementary (together used) goods price are inversely related with a good's demand because - complements price rise makes the product combination expensive, decreases its demand & viceversa. 1st eg: Coke, Pepsi ; 2nd eg: Tea, Sugar.

If income elasticity of demand for good X is negative : implies it varies inversely with Income - It is an Inferior Good

If Cross Price Elasticity of demand between good X and good Y is negative : Implies Y's prices & X's demand vary inversely - Both are complements of each other.

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Answer:

Task 1:

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Task 2:

The answer is $130.

Task 3:

The answer is $20.

Task 4:

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Task 5:

The answer is $110.

Explanation:

<h2>Task 1:</h2><h3>How much does each investor make on his investment with the 7% rate of return?</h3><h3>Solution:</h3>

Adrian & Clemens makes [$10,000*0.07] on their investment = $700.

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<h2>Task 3:</h2><h3>How much does Clemens pay in fees for the index fund?</h3><h3>Solution:</h3>

Clemens owes to his broker= ($10000*.002) = $20

<h2>Task 4:</h2><h3>At the end of the year, what's the total value (AFTER FEES) of Adrian's mutual fund?</h3><h3>Solution:</h3>

Value of Adrian's stock = $10000+$570 (net of brokerage) = $10,570

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Value of clemens' stock = $10000+$680 (net of brokerage) = $10,680

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2 years ago
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Answer:

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The formula for calculating PV is shown below

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Example

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