An urban transit study reveals that a 12% increase in the monthly subscription price of a public bike-sharing service leads to an 8% decrease in the quantity demanded of safety helmets, and a 3% increase in the quantity demanded of private electric scooters.
Which of the following correctly identifies the cross-price elasticity of demand (XED\text{XED}XED) for helmets with respect to the bike-sharing subscription price, and the economic relationship between bike-sharing services and private electric scooters?
XED=−0.67\text{XED} = -0.67XED=−0.67, and the relationship between bike-sharing and electric scooters is substitute.
XED=−1.50\text{XED} = -1.50XED=−1.50, and the relationship between bike-sharing and electric scooters is substitute.
XED=−0.67\text{XED} = -0.67XED=−0.67, and the relationship between bike-sharing and electric scooters is complement.
XED=+0.67\text{XED} = +0.67XED=+0.67, and the relationship between bike-sharing and electric scooters is complement.
256 exam-style questions on AQA A Level Economics 1.3 Price determination in a competitive market, covering 1.3.1 The determinants of the demand for goods and services, 1.3.2 Price, income and cross elasticities of demand, 1.3.3 The determinants of the supply of goods and services, 1.3.4 Price elasticity of supply, 1.3.5 The determination of equilibrium market prices, and 1.3.6 The interrelationship between markets. Each one has a worked solution and a mark scheme showing where the marks go.