A Fall in the Price of X from $6 to $4

question 117

Multiple Choice

A fall in the price of X from $6 to $4 increases the quantity of Y demanded from 900 to 1,100 units.What is the cross elasticity of demand for Y with respect to the price of X?

• A)0.5
• B)-0.5
• C)2
• D)-2
• E)Either 0.5 or -0.5,depending on whether X and Y are substitutes or complements.

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Definitions:

Firm's Production

The process or activities undertaken by a business to combine inputs like labor, capital, and materials to produce goods or services for sale.

Cournot Duopolists

Firms in a duopoly market structure, where two companies dominate, that decide on their output level assuming the other's output as given, under Cournot competition.

Demand Curve

Illustrates the relationship between the price of a good and the quantity of that good consumers are willing and able to purchase at each price level.

Total Costs

The combined total of fixed and variable costs involved in the manufacturing of goods or services.