Refer to Scenario 3 . Why are elasticities of demand rather than slopes used to measure and compare responsiveness?
What will be an ideal response?
Elasticities are useful because they are unit-free, and one can therefore compare elasticities between different types of goods. In contrast, slopes are not unitless. Hence, comparison between different products is much easier with elasticity.
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Indicate whether the statement is true or false
The cross-price elasticity of demand between pancakes and waffles is positive. This indicates all of the following except one. Which is the exception?
a. Pancakes and waffles are substitutes. b. An increase in the price of pancakes will shift the demand curve for waffles to the right. c. An increase in the price of waffles will shift the demand curve for pancakes to the right. d. A decrease in the supply of waffles will shift the demand curve for pancakes to the right. e. Pancake demand and waffle demand are price elastic.