Business, 14.07.2019 03:00 jadajones5313

Suppose the cross-price elasticity of demand between eggplant and broccoli is 0.4 (eeggplant/broccoli = 0.4). if the price of broccoli increases 10%, we would expect to see the quantity of eggplant demanded

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Cross price elasticity shows us the responsiveness of quantity demand to a change in price of the related goods (substitutes or complements). When cross price elasticity is positive the goods are substitute goods, while if it is negative the goods are complementary to each other.

The formula for it is given by,

$Ec= \frac{Percentage change in quanity}{Percentage change in price of other good}$

$0.4= \frac{Percentage change in quantity}{10}$

Percentage change in quantity = 4

Thus, when price of broccoli rises by 10%, quantity demanded of eggplant rise by 4%. Consumers will start buying more eggplants as broccoli has become more expensive.

Answer from: Quest

answer; organizational;

Answer from: Quest

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans.

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.

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