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The price of a banana has increased from £0.10 to £0.20. As a result quantity demanded of apples increased from 2.4 million units to 3.6 million units. Calculate the cross price elasticity of demand and interpret the value..

First we must use the formula to calculate cross price elasticity: XED= percentage change in quantity demanded of good A/percentage change in price of good B We are given the changes in quantity demanded for...
HM
Answered by Hugo M. • Economics tutor
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Discuss the effect of a carbon tax on the level of carbon emissions

A carbon tax can be implemented to address the negative externality from carbon emissions at the point of production from firms. The tax forces firms to cut their emissions as it increases their costs; this ...
EJ
Answered by Evie J. • Economics tutor
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Why does a lower interest rate increase aggregate demand?

A lower interest rate reduces the return on saving, and as such reduces the opportunity cost of spending - for the only alternative to spending is saving. This increases the incentive for consumers and insti...
JM
Answered by Joseph M. • Economics tutor
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What is meant by the different sectors of economies?

Economies are made up of three sectors; the primary sector, which involves extraction of raw materials (e.g. timber), the secondary sector, which is concerned with manufacturing (e.g. turning timber into cha...
LW
Answered by Liora W. • Economics tutor
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What do consumer and producer surplus represent?

Consumer surplus is the benefit to people who want to buy a certain good that comes from the good being cheaper than what the consumer would be willing to pay; in other words, it is the difference between th...
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Answered by Liora W. • Economics tutor
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