Cross Elasticity of Demand 1 - A Level Economics MCQ Quiz

Question 1/12

Cross elasticity of demand measures the

responsiveness of supply of one good to a change in the price of another good. responsiveness of the price of one good to a change in the price of another good. responsiveness of demand for one good to a change in demand for another good. responsiveness of the price of one good to a change in demand for another good. responsiveness of demand for one good to a change in the price of another good.

Question 2/12

To calculate the cross elasticity of demand between two goods, X and Y, you should divide the percentage change in

the quantity demanded of Y by the percentage change in the quantity demanded of X. the quantity demanded of X by the percentage change in the quantity demanded of Y. the quantity demanded of X by the percentage change in the price of Y. the price of X by the percentage change in the quantity demanded of Y. the price of Y by the percentage change in the price of X.

Question 3/12

The cross elasticity of demand between two goods, A and B, is positive. This means that A and B are

in composite demand. substitutes. both inferior goods. in joint supply. complements.

Question 4/12

The cross elasticity of demand between goods P and Q is 0.8, and between goods P and R is -0.6. What will happen to demand for Q and R if the price of P rises?

A rise in demand for Q and a rise in demand for R. A rise in demand for Q and a fall in demand for R. A fall in demand for Q and a rise in demand for R. A fall in demand for Q and a fall in demand for R. No change in demand for either Q or R.

Question 5/12

Which one of the following scenarios describes a positive cross elasticity of demand?

A fall in the price of games consoles increases demand for video games. A fall in the price of coffee machines increases demand for coffee pods. A rise in the price of printers decreases demand for printer ink. A fall in the price of digital cameras increases demand for memory cards. A rise in the price of butter increases demand for margarine.

Question 6/12

Which one of the following scenarios describes a negative cross elasticity of demand?

A rise in the price of one budget airline increases demand for a rival budget airline. A fall in the price of one brand of trainers increases demand for a rival trainer brand. A rise in the price of tea increases demand for coffee. A rise in the price of margarine increases demand for butter. A fall in the price of flights increases demand for hotel bookings at the destination.

Question 7/12

A product has a cross elasticity of demand of +2.5 with respect to a rival product. What does this indicate?

It is unrelated to the rival product. It is a distant complement to the rival product. It is a close substitute for the rival product. It is a distant substitute for the rival product. It is a close complement to the rival product.

Question 8/12

A regulator has estimated the cross elasticity of demand for the products of five rival companies with respect to the prices of their closest substitutes, as shown below.

All other things being equal, which one of these companies is most likely to possess the greatest market power?

	Product of	Cross elasticity of demand
	Company V	+1.2
	Company W	+0.2
	Company X	+1.8
	Company Y	+0.6
	Company Z	+0.9

Question 9/12

The price of a particular smartphone rises from £600 to £660. As a result, demand for a rival smartphone brand rises from 5,000 to 5,500 units per month. What is the cross elasticity of demand for the rival brand with respect to the first smartphone's price, and what is the relationship between the two brands?

Cross elasticity of demand is +1.0, and the two brands are substitutes. Cross elasticity of demand is +1.0, and the two brands are complements. Cross elasticity of demand is -1.0, and the two brands are substitutes. Cross elasticity of demand is -1.0, and the two brands are complements. Cross elasticity of demand is +0.1, and the two brands are substitutes.

Question 10/12

The price of tablet computers rises from £200 to £220. As a result, demand for a particular brand of stylus pen falls from 8,000 to 7,200 units per month. What is the cross elasticity of demand for stylus pens with respect to the price of tablet computers?

-2.0 -1.0 -0.5 -0.1 1.0

Question 11/12

A change in the price of good M causes the demand for good N to fall by 6%. The cross elasticity of demand between the two goods is -1.2. If the price of good M is now £42, what was its original price?

£38.18 £39.90 £40 £41 £44.10

Question 12/12

A rise in the price of good R from £30 to £33 causes a change in demand for good S. The cross elasticity of demand between the two goods is +2.5. What is the expected percentage change in demand for good S?

-25% +4% +12.5% +25% +35%