Author Question: When the price of a bagel rises from 0.45 to 0.65, the quantity of cream cheese demanded falls from ... (Read 138 times)

HCHenry

  • Hero Member
  • *****
  • Posts: 591
When the price of a bagel rises from 0.45 to 0.65, the quantity of cream cheese demanded falls from 12,000 to 10,000 ounces per year. Use the midpoint formula to calculate the cross-price elasticity between bagels and cream cheese.
 
  What does the sign imply about the relationship between these two goods?

Question 2

Compare the growth rates in Hong Kong, Korea, Singapore, Taiwan, China, and the United States. In terms of real GDP per person, how far is China behind these others?
 
  What will be an ideal response?



adammoses97

  • Sr. Member
  • ****
  • Posts: 337
Answer to Question 1

percentage change in quantity of cream cheese demanded = (10,000-12,000)/11,000 = -2,000/11,000 = -18.2
percentage change in the price of a bagel = (0.65 - 0.45)/0.55 = 0.20/0.55 =
36.4 . Therefore, the cross price elasticity = -18.2/36.4 = -0.5

Because the cross-price elasticity is negative, this implies that the two goods are complements.

Answer to Question 2

Since 1960, income per person in the nations of Hong Kong, Singapore, Korea, Taiwan, and China have grown very rapidly and are rapidly catching up to the United States. Income per person in Hong Kong is virtually the same as that in the United States and income per person in Singapore slightly exceeds that in the United States. Income in Korea also is relatively close. Income in China is the lowest, though recently China has been growing the most rapidly. China's level of income in 2010 is similar to that of Hong Kong in 1976.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question


 

Did you know?

Hyperthyroidism leads to an increased rate of metabolism and affects about 1% of women but only 0.1% of men. For most people, this increased metabolic rate causes the thyroid gland to become enlarged (known as a goiter).

Did you know?

The first war in which wide-scale use of anesthetics occurred was the Civil War, and 80% of all wounds were in the extremities.

Did you know?

Symptoms of kidney problems include a loss of appetite, back pain (which may be sudden and intense), chills, abdominal pain, fluid retention, nausea, the urge to urinate, vomiting, and fever.

Did you know?

Vital signs (blood pressure, temperature, pulse rate, respiration rate) should be taken before any drug administration. Patients should be informed not to use tobacco or caffeine at least 30 minutes before their appointment.

Did you know?

Only 12 hours after an egg cell is fertilized by a sperm cell, the egg cell starts to divide. As it continues to divide, it moves along the fallopian tube toward the uterus at about 1 inch per day.

For a complete list of videos, visit our video library