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Question: there are two goods good a and good b for...

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There are two goods, good A and good B. For each question, select the correct answer from the dropdown box.

(a) Suppose that when the price of Good A increases from $4 to $5, the demand for Good B decreases from 55 units to 40 units. Using the midpoint formula, the cross price elasticity of demand for good B with respect to the price of good A is

i) 1.42

ii) 1.50

iii) -1.50

iv) -1.42

 

(b) Of the following, which is the best example of what Good A and Good B may be?

i) butter and margarine

ii) printer and ink

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