Suppose the cross elasticity of demand for two goods, X and Y, is positive. If the price of Y falls, then quantity demanded will.. O a. Rise for both goods. O b. Rise for X and fall for Y. O c. Remain the same for both goods. O d. Fall for X and rise for Y. O e. Fall for both goods.

Suppose the cross elasticity of demand for two goods, X and Y, is positive. If the price of Y falls, then quantity demanded will.. O a. Rise for both goods. O b. Rise for X and fall for Y. O c. Remain the same for both goods. O d. Fall for X and rise for Y. O e. Fall for both goods.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Elasticity of Demand and Supply

The elasticity of demand and supply are two important concepts of microeconomics. The elasticity of demand measures the responsiveness of consumers’ demands to the price change, changes in income of consumers, and changes in the price of the related goods. Similarly, the elasticity of supply refers to the proportionate change in the quantity supplied due to the proportionate change in the price. In other words, it can be said that elasticity of supply measures how the quantity of supply changes when the price changes of that particular product.

Question

Suppose the cross elasticity of demand for two goods, X and Y, is positive. If the price of Y falls, then quantity
demanded will..
O a. Rise for both goods.
O b. Rise for X and fall for Y.
O c. Remain the same for both goods.
O d. Fall for X and rise for Y.
O e. Fall for both goods.

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