What is the cross price elasticity coefficient for Goods X and Y between the prices of Good X of $1 to $2? (Round to hundredth please.) (No work needed.)
Row | Price of Good X | Quantity Demand of Good X | Quantity Supply of Good X | Price of Good Y | Buyer's Income |
|---|---|---|---|---|---|
1 | $1 | 40 | 12 | $10 | $100 |
2 | 2 | 38 | 15 | 11 | $120 |
3 | 3 | 36 | 26 | 12 | $110 |
4 | 4 | 10 | 28 | 13 | $105 |
5 | 6 | 10 | 35 | 14 | $105 |
6 | 6 | 8 | 50 | 13 | $90 |
7 | 7 | 3 | 50 | 10 | $50 |
Use this table for ALL calculations. Heads up...there are NO mistakes in this table. The table may or may not represent functions that you are familiar with. FOCUS only on the parts of the table that are requested in your problem.
For Good X, there is no price effect and ALL quantity effect between rows on the table.
Using the midpoint formula and the table above, when the price of Good X increases from $4 to $7 the price elasticity of supply is , implying the quantity supply over this price range is .
Perfectly Price Elastic
Between 0 and 1
Between 1 and Infinity
Relatively Price Inelastic
Perfectly Price Inelastic
Infinite
Based on the table, the income elasticity toward Good X would be calculated by setting up the formula of (/ ) divided by (/). We can also condense this formula into /.
Using the table above. When performing the total revenue test for Good X from row 1 to row 4, the price from $1 to $4. At the same time, total revenue from to . These results would indicate that demand is over this price range, given that both price and quantity do change by some amount.