1.3 Price determination in a competitive market

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Question 56

An electronics manufacturer monitors the sales of its premium VR headsets ( $H$ ) and compatible VR gaming titles ( $G$ ). Following a 15% reduction in the price of VR headsets, the quantity demanded of VR gaming titles increases by 12%, while the quantity demanded of a rival's standalone console ( $C$ ) decreases by 9%.

Which of the following correctly identifies the economic relationships between these goods and their corresponding cross-price elasticities of demand ( $X E D$ )?

$H$ and $G$ are complements with $XED_{HG} = -0.8$ , while $H$ and $C$ are substitutes with $XED_{HC} = +0.6$ .

$H$ and $G$ are substitutes with $XED_{HG} = +1.25$ , while $H$ and $C$ are complements with $XED_{HC} = -1.67$ .

$H$ and $G$ are complements with $XED_{HG} = -1.25$ , while $H$ and $C$ are substitutes with $XED_{HC} = +1.67$ .

$H$ and $G$ are substitutes with $XED_{HG} = +0.8$ , while $H$ and $C$ are complements with $XED_{HC} = -0.6$ .

1.3 Price determination in a competitive market

Question 56

Which of the following correctly identifies the economic relationships between these goods and their corresponding cross-price elasticities of demand ( $X E D$ )?

$H$ and $G$ are complements with $XED_{HG} = -0.8$ , while $H$ and $C$ are substitutes with $XED_{HC} = +0.6$ .

$H$ and $G$ are substitutes with $XED_{HG} = +1.25$ , while $H$ and $C$ are complements with $XED_{HC} = -1.67$ .

$H$ and $G$ are complements with $XED_{HG} = -1.25$ , while $H$ and $C$ are substitutes with $XED_{HC} = +1.67$ .

$H$ and $G$ are substitutes with $XED_{HG} = +0.8$ , while $H$ and $C$ are complements with $XED_{HC} = -0.6$ .

1.3 Price determination in a competitive market

Question 56

Markscheme

1.3 Price determination in a competitive market

Question 56

Markscheme

1.3 Price determination in a competitive market

Question 56

1.3 Price determination in a competitive market Questions

1.3 Price determination in a competitive market

Question 56

1.3 Price determination in a competitive market Questions