The Cross-Price Elasticity of Demand Between Good X and Good

question 35

Multiple Choice

The cross-price elasticity of demand between good X and good Y is 2.75. Given this information, which of the following statements is true?

• A) The demand for goods X and Y is inelastic.
• B) Goods X and Y are substitutes.
• C) Goods X and Y are complements.
• D) The demand for goods X and Y is income inelastic.

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Definitions:

Personal Income Taxes

Taxes levied on individuals or households based on their total personal income from all sources.

Ability-To-Pay

A tax principle that holds that taxes should be levied on individuals based on their capacity to pay, typically reflected in their income or wealth levels.

Ability-To-Pay Principle

The principle of tax fairness by which those with greater ability to pay a tax should pay more tax.

Ability-To-Pay

A concept in taxation that taxes should be levied according to an individual or entity’s ability to shoulder the tax burden.