There are three goods you are interested in purchasing, X, Y and Z. You notice that the price of Z has fallen. Given that the cross price elasticity between Z and Y is ?1.5; the cross price elasticity between Y and X is 3.0, and the cross price elasticity between Z and X is 0.50. It would make sense that:
A. Z and X are complements; Y and X are substitutes.
B. Y and X are substitutes; Y is complementary to Z.
C. X and Z are unrelated; Y is complementary to X.
D. X and Z are complements; Y and Z are substitutes.
Answer: B
Economics
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