The cross-price elasticity of demand between good X and good Y is 0.5. Given this information, which of the following statements is true?
A. The demand for goods X and Y is inelastic.
B. The demand for goods X and Y is income inelastic.
C. Goods X and Y are complements.
D. Goods X and Y are substitutes.
Answer: D
You might also like to view...
Refer to Table 2-25. This table shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland
a. Which country has an absolute advantage in the production of motorcycles? b. Which country has an absolute advantage in the production of guitars? c. What is Ireland's opportunity cost of producing one motorcycle? d. What is Scotland's opportunity cost of producing one motorcycle? e. What is Ireland's opportunity cost of producing one guitar? f. What is Scotland's opportunity cost of producing one guitar? g. If each country specializes in the production of the product in which it has a comparative advantage, which country should produce motorcycles? h. If each country specializes in the production of the product in which it has a comparative advantage, which country should produce guitars?
Which of the following is an example of a physical constraint?
a. The work you can perform on 1,500 calories a day. b. The wages you can earn against each hour of work. c. The bank balance of an individual at any point of time. d. The contract price at which you agree to sell your house.