The Table Below Gives Data for a Particular Market A) What Is the Price Elasticity of Demand for the

question 175

Short Answer

The table below gives data for a particular market. $$\begin{array} { c c c c c c } \hline \text { Year } & \begin{array} { c } \text { Average } \\\text { Income }\end{array} & \text { Price of A } & \text { Qu. of A } & \text { Price of B } & \text { Qu. Of B } \\\hline 1 & \$ 40000 & \$ 2 & 800 & \$ 10 & 16 \\2 & 40000 & 3 & 600 & 10 & 18 \\3 & 40000 & 3 & 400 & 8 & 20 \\4 & 48000 & 3 & 600 & 8 & 22 \\\hline\end{array}$$ a) What is the price elasticity of demand for the product A?
b) What is the price elasticity of demand for the product B?
c) What is the income elasticity of demand for the product A?
d) What is the income elasticity of demand for the product B?
e) What is the cross-elasticity of demand of product A for a change in the price of product B?

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Definitions:

Money Markets

Financial markets for short-term borrowing and lending, typically dealing with assets that mature in less than one year.

Trillions

A numerical value representing one thousand billion, or 10^12, used in the context of large sums, such as government budgets or the global economy.

Brokers' Call Rate

The interest rate charged by banks to brokers for the money borrowed to fund their clients' margin accounts.

Margin Account

Margin Account is a brokerage account which allows investors to borrow money to buy securities, using the purchased securities as collateral for the loan.