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Economics, Accounting & Business: Post your doubts here!

Crimson-Saint

Crimson-Saint

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Shara Nafaz said:
http://papers.xtremepapers.com/CIE/Cambridge International A and AS Level/Economics (9708)/9708_w07_qp_1.pdf
Q6 ayone?
Click to expand...


to do this u first use the formula of XED which is %change in qd of x/ % change in price of y in the question the xed is given -2 and qd %change is given 20 solve for X (with "X" being the %change in price of y) and u get -10 u then look through the choice and see what price change gives u -10 in this case opttion C is the one so answer is c
 
S

Sarah Paul

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SamiaSaad said:
The answer is C

% change in price =4500-5000/5000 * 100 = -10%
Cross elasticity of demand = 20/-10 = -2
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Crimson-Saint said:
to do this u first use the formula of XED which is %change in qd of x/ % change in price of y in the question the xed is given -2 and qd %change is given 20 solve for X (with "X" being the %change in price of y) and u get -10 u then look through the choice and see what price change gives u -10 in this case opttion C is the one so answer is c
Click to expand...

Thanks
 
SitiPutri

SitiPutri

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SitiPutri said:
Can't do it lol it's my doubt as well. Could anyone do this please?
Click to expand...

Eh wait I think I got it.

Okay so X, Y, Z possess 4 clocks at the same time. But it can't be like that because then the price for the clocks will vary from one collector to another (If X possess 4 clocks then the price of each clock is 1000andifYpossess4clocksthenthepriceofeachclockis1000 and if Y possess 4 clocks then the price of each clock is 2000. Thus the price is not fixed)

So, X, Y, Z come together to trade between each other in order to get a fixed price. Now look, when X possess 4 clocks, the price is $1000. On that price, Y could buy 6 clocks and Z could buy 9 clocks. But they can't trade because Y needs additional 2 clocks while Z needs additional 5 clocks.

And when Y possess 4 clocks, the price is $2000. On that price, X could only buy 2 clocks and Z could buy 6 clocks. X then has to sell 2 clocks and Z has to buy 2 clocks in order to satisfy their demand schedule. Thus, trade will happen between X and Z with X as the seller and Z as the buyer.

Hope that makes sense haha if there's anyone else that could explain this better than me it'd be great!
 
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Sarah Paul

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SitiPutri said:
Eh wait I think I got it.

Okay so X, Y, Z possess 4 clocks at the same time. But it can't be like that because then the price for the clocks will vary from one collector to another (If X possess 4 clocks then the price of each clock is 1000andifYpossess4clocksthenthepriceofeachclockis1000 and if Y possess 4 clocks then the price of each clock is 2000. Thus the price is not fixed)

So, X, Y, Z come together to trade between each other in order to get a fixed price. Now look, when X possess 4 clocks, the price is $1000. On that price, Y could buy 6 clocks and Z could buy 9 clocks. But they can't trade because Y needs additional 2 clocks while Z needs additional 5 clocks.

And when Y possess 4 clocks, the price is $2000. On that price, X has to sell 2 clocks and Z has to buy 2 clocks in order to satisfy their demand schedule. Thus, trade will happen between X and Z with X as the seller and Z as the buyer.

Hope that makes sense haha if there's anyone else that could explain this better than me it'd be great!
Click to expand...

Is the answer D?
 
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