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Egt1 Task 1

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EGT Task 1

A. Demand of a unit is inelastic when the price is one and the increase to price makes the revenue higher. Elastic demand occurs when the price is higher than one and with the fluctuation of prices increase and decreases total revenue will incline or decline. A good example would be when the demand measurement is changed as when a company lowers the price products to boosts or increase sales.

B. The cross elasticity of demand measures how sensitive consumer purchases of one product (say, X) are to a change in the price of some other product (say, Y). We calculate the coefficient of cross elasticity of demand Exy just as we do the coefficient of simple price elasticity, except that Cross-price elasticity is a measure of how sensitive consumer purchases of one product are to a change in the price of some other product .Substitute goods are goods that can be used in the place of other goods, like bread and bagels. Complementary goods are goods that are used along with other goods, like coffee and creamer. In other words, they “complement” each other.
3. Income elasticity measures how much a change in a consumer’s income will affect their purchasing habits of normal goods, such as automobiles, groceries, and houses, as well as inferior goods, such as potted meat and bus tickets. Goods whose demand rises when incomes rise but decreases when incomes fall are normal goods. Goods whose demand rises when incomes decrease but decreases when incomes rise are inferior goods.
Part C:
1. The elasticity of demand measures the change of price and demand of one particular item. As a business owner, this is a useful tool to measure the effect of the price of a product on the total revenue of that product.
2. Cross-price elasticity measures the affect that the change of a price of one item has on the price and demand of a different item. As a

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