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Chapter 19: Problem 5

Pick a good whose demand is price elastic. List five substitutes and five complements. Which is easier to come up with, the list of substitutes or the list of complements? Explain.

Short Answer

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Step by step solution

01

Pick a good whose demand is price elastic

Choose a good whose demand is price elastic, for example, soft drinks.
02

List five substitutes

Identify five substitutes for the chosen good. For soft drinks, possible substitutes include: 1. Bottled water 2. Sports drinks 3. Fruit juices 4. Energy drinks 5. Tea or coffee
03

List five complements

Identify five complements for the chosen good. For soft drinks, possible complements include: 1. Fast food 2. Snack foods (e.g., chips, popcorn) 3. Pizza 4. Sandwiches or wraps 5. Movie theater or sporting event tickets (as the consumption of soft drinks often happens with these activities)
04

Determine which list is easier to come up with and explain

In this case, it might be easier to come up with the list of substitutes for soft drinks since they are beverages that can all quench thirst, be consumed as a refreshment, and many offer similar benefits. On the other hand, thinking of complements may be somewhat more challenging because they involve diverse types of products or services that go well with, but are not direct replacements for, soft drinks. However, this could vary depending on the individual's perspective and familiarity with the given good.

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Most popular questions from this chapter

The cross-price elasticity of the demand for cell phones and DVDs is 1.2. Explain. The cross-price elasticity of the demand for the iPod and DVDs is -1.4. Explain.

Calculate the income elasticity of demand from the following data (use the arc or average). $$ \begin{array}{lc} \text { Income } & \text { Quantity Demanded } \\ \hline \$ 15,000 & 20,000 \\ \$ 20,000 & 30,000 \\ \hline \end{array} $$

What would a 10 percent increase in the price of movie tickets mean for the quantity demanded of a movie theater if the price elasticity of demand was \(0.1,0.5,1.0\), and \(5.0\) ?

Using the following equation for the demand for a good or service, calculate the price elasticity of demand (using the point form), cross-price elasticity with \(\operatorname{good} x\), and income elasticity. $$ Q=8-2 P+0.10 l+P_{\times} $$ \(Q\) is quantity demanded, \(P\) is the product price, and \(P_{x}\) is the price of a related good, and \(I\) is income. Assume that \(P=\$ 10, I=100\), and \(P_{x}=20\).

The price elasticity of the demand for gasoline is \(-0.02\). The price elasticity of demand for gasoline at Joe's 66 station is \(-1.2\). Explain what might account for the different elasticities.
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