If the Cross Elasticity of Demand Between Goods a and B

question 126

Multiple Choice

If the cross elasticity of demand between goods A and B is positive

• A) the demands for A and B are both price elastic.
• B) the demands for A and B are both price inelastic.
• C) A and B are complements.
• D) A and B are substitutes.

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Definitions:

Weak Axiom

A principle in consumer theory that, if a consumer chooses bundle A over bundle B when both are affordable, they will not choose B over A if A's price decreases and B's price stays the same or increases.

Revealed Preference

A theory that determines a consumer's preferences based on their purchasing behavior, under the assumption that their choices reveal their valuation of goods.

Insurance Agent

A professional who sells, solicits, or negotiates insurance policies on behalf of an insurer.

Hours Worked

Hours worked refer to the total number of hours spent by an individual or aggregate workforce in performing their job duties within a specific period.