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:

Market Interest Rate

The prevailing rate at which borrowers can obtain loans and savers can earn returns on their deposits in the financial markets.

Investment Demand Curve

A graphical representation showing the inverse relationship between the interest rate and the total amount invested.

Movement Along

A movement along a demand or supply curve represents a change in the quantity demanded or supplied as a result of a change in the good's price, without shifting the curve itself.

Shift Of

An alteration in the position or direction of something, often used in economic contexts to describe changes in supply, demand, or other market variables.