« previous next »

Author Question: The cross-price elasticity between natural gas and heating oil is estimated to be 2.3 . The ... (Read 28 times)

student77

  • Hero Member
  • *****
  • Posts: 567
on: Jun 29, 2018
The cross-price elasticity between natural gas and heating oil is estimated to be 2.3 . The cross-price elasticity between natural gas and electricity is estimated to be -0.8 .
 
  What is the relationship between natural gas and heating oil? What is the relationship between natural gas and electricity? Explain.

Question 2

A rule that specifies the highest price that a regulated firm is permitted to set is called
 
  A) rate of return regulation.
  B) price cap regulation.
  C) maximum price regulation.
  D) average/marginal cost pricing.


bdobbins

  • Sr. Member
  • ****
  • Posts: 326
Reply #1 on: Jun 29, 2018
Answer to Question 1

Because the cross-price elasticity is positive, natural gas and heating oil are substitutes. As the price of one goes up, the demand for the other increases. On the other hand, natural gas and electricity are complements because the cross-price elasticity is negative. When the price of one goes up, the demand for the other falls.

Answer to Question 2

B


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

The Food and Drug Administration has approved Risperdal, an adult antipsychotic drug, for the symptomatic treatment of irritability in children and adolescents with autism. The approval is the first for the use of a drug to treat behaviors associated with autism in children. These behaviors are included under the general heading of irritability and include aggression, deliberate self-injury, and temper tantrums.

Did you know?

There are 60,000 miles of blood vessels in every adult human.

Did you know?

The shortest mature adult human of whom there is independent evidence was Gul Mohammed in India. In 1990, he was measured in New Delhi and stood 22.5 inches tall.

Did you know?

People about to have surgery must tell their health care providers about all supplements they take.

Did you know?

In 2006, a generic antinausea drug named ondansetron was approved. It is used to stop nausea and vomiting associated with surgery, chemotherapy, and radiation therapy.

Cross-Section of a Banana Under a Microscope. Cross-Section of a Banana Under a Microscope.
Increasing Costs of Natural Disasters Increasing Costs of Natural Disasters
Selected Natural Products Selected Natural Products
Natural Products Natural Products
A cross section of a typical wax-actuated thermostat showing the position of the wax pellet and ... A cross section of a typical wax-actuated thermostat showing the position of the wax pellet and ...
Natural plant sources of pharmaceutical Natural plant sources of pharmaceutical
Video: Embryonic development - Weeks 5 to 8

For a complete list of videos, visit our video library