--%>
Assignment Help - homework help

Negative-positive coefficient in cross-elasticity of demand

When you compute cross-elasticity of demand, what are you trying to find out?  What do a negative coefficient and a positive coefficient imply?

E

Expert

Verified

You are trying to find out whether pair of goods is complements or substitutes.  A negative coefficient implies a substitute when a positive coefficient implies a complementary good.

   Related Questions in Microeconomics

  • Q : Type of model used by economists Which

    Which type of model is used by the economists to analyze competitive market?

    		•
  • Q : Problem regarding Substitution of goods

    When tuna fish ice cream and licorice gummy bears are substitutes, then: (1) Decline in the price of licorice gummy bears raises the demand for tuna fish ice-cream. (2) The demand for tuna fish ice-cream is independent of price of licorice gummy bears. (3) Consuming m

    		•
  • Q : Reduced effectiveness by pressure The

    The increased pace of globalization and the steady development of worldwide demands for petroleum-based products from 2002 have tended to decrease the: (w) derived demand for petroleum. (x) prices of gasoline and electricity. (y) pressures which had reduced OPEC's eff

    		•
  • Q : Constant price elasticities in

    Perfectly inelastic demand curves include constant price elasticities equivalent to zero as well as: (i) cannot exist within the real world across the full range of possible prices. (ii) happen more often than any other type. (iii) are horizontal line

    		•
  • Q : Competitive Markets-Unions of labor Can

    Can someone please help me in finding out the accurate answer from the following question? The purely competitive labor markets are not characterized through: (w) Most of the individual buyers and sellers of the labor services. (x) Wages equivalent to the marginal res

    		•
  • Q : Linear demand curves and elasticity

    When price falls along a negatively sloped, there straight-line demand curve, then slope: (w) is constant, and elasticity of demand falls. (x) and elasticity of demand both rise. (y) falls, and elasticity of demand rises. (z) rises, and elasticity of

    		•
  • Q : Functional Distribution of Income

    Computing the relative shares of national income accounted for by wages, interest, rent, and profit, yields, respectively measures called the: (1) market distribution of income. (2) functional distribution of income. (3) objective distribution of inco

    		•
  • Q : Consumption and saving schedules The

    The consumption and saving schedules demonstrate that: A) consumption rises, but saving declines, as disposable income rises. B) saving varies inversely with the profitability of investment. C) saving varies directly with the level of disposable income. D) saving is i

    		•
  • Q : Quantity supply or demand to changes in

    When a measure of the responsiveness of one variable to other (for example, quantity supplied [or demanded] to changes within price), elasticity: (w) provides no criterion for identifying responsiveness. (x) depends on the units used to express change

    		•
  • Q : Long-run In the long-run, an increase

    In the long-run, an increase in consumer desire for strawberries is most likely to:

    		•