ECONOMICS
MARKETS AND PRICES
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
+4.0%
|
|
|
-4.0%
|
|
|
+0.25%
|
|
|
-0.25%
|
Detailed explanation-1: -If cross price elasticity of demand is a positive value, the two goods or services would be substitutes. Whereas, if the cross-price elasticity of demand is a negative value, the two goods or services would be complementary goods or services.
Detailed explanation-2: -A negative cross elasticity of demand indicates that the demand for good A will decrease as the price of B goes up. This suggests that A and B are complementary goods, such as a printer and printer toner. If the price of the printer goes up, demand for it will drop.
Detailed explanation-3: -If quantity demanded changes by a larger percentage than price (i.e., if demand is price elastic), total revenue will change in the direction of the quantity change.
Detailed explanation-4: -The cross-price elasticity of demand for two goods that are complements will be negative.