Asked by Samantha Rojas on Jul 04, 2024
Verified
Cross-price elasticity is used to determine whether goods are inferior or normal goods.
Cross-Price Elasticity
A measure used in economics to show how the quantity demanded of one good changes in response to a change in the price of another good.
Inferior Goods
Goods for which demand decreases as the income of the consumer increases, opposite to normal goods.
Normal Goods
Goods for which demand increases as consumers' income increases, holding all other factors constant.
- Identify the differences between regular and lesser-quality goods through the application of income elasticity of demand.
Verified Answer
Learning Objectives
- Identify the differences between regular and lesser-quality goods through the application of income elasticity of demand.
Related questions
Normal Goods Have Negative Income Elasticities of Demand, While Inferior ...
If We Observe That When Consumers' Incomes Rise by 10 ...
Normal Goods Have Positive Income Elasticities of Demand, While Inferior ...
If Income Elasticity for a Good or Service Is ______,Then ...
If a Decrease in Income Results in a Decrease in ...