If the quantity demanded of beef increases by 5% when the price of chicken increase by 20% the cross-price elasticity of demand between beef and chicken is ?
Correct answer: B. 0.25
- A. -4
- B. 0.25
- C. 4
- D. -0.25
Explanation
Cross-price elasticity equals the percentage change in quantity demanded of beef divided by the percentage change in the price of chicken: 5% ÷ 20% = 0.25. Its positive sign shows that beef and chicken are substitutes.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
Practise Microeconomics
1,742 free Microeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Microeconomics questions
If marginal utility is zero ?
An increase in the price of a complement for product A would ?
If a product is a vablen good ?
The price elasticity of demand is the ?
Market equilibrium exists when _________ at the prevailing price?
The price of computer chips used in the manufacture of personal computers has fallen. This will lead to _________ personal computer?