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

question 61

Multiple Choice

The cross-price elasticity of demand between good X and good Y is -3. Given this information, which of the following statements is true?

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

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Definitions:

Profit Maximized

Profit maximized refers to a scenario where a firm achieves the highest possible profit from its operations, where marginal costs equal marginal revenue.

Marginal Profit

Marginal profit refers to the additional profit a company gains from selling one more unit of a good or service.

Marginal Revenue

The additional income gained by selling one more unit of a product or service.

Total Cost

The sum of all expenses incurred in the production of goods or services, including both fixed and variable costs.