Economics Multiple Choice Question – 19 July 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Economics

A product has a cross-elasticity of demand of – 0.2 in relation to another product.

What does this indicate?

Select ONE answer:

  1. It is a close complement to another product.
  2. It is a distant complement to another product.
  3. It is a close substitute for another product.
  4. It is a distant substitute for another product.

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 2

  1. A close complement would have a high negative XED.
  2. Correct: the minus figure indicates that the product is a complement and the low figure of 0.2 suggests that it is not very responsive to a change in the price of the product it is purchased to use with it.
  3. A close substitute would have a high positive XED.
  4. A distant substitute would have a low figure such 0.2 but it would be a positive and not a negative figure.

 

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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