If Good X₁ is a Substitute for Good X_2, then

question 27

Multiple Choice

If good x₁ is a substitute for good x_2, then the cross price elasticity of demand for x₁ with respect to the price of x₂ is:

• A)zero.
• B)negative.
• C)positive.
• D)undefined.

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Definitions:

Relatively Small

A comparative term indicating that something is smaller in size, amount, or degree when compared to others in a similar context.

Number of Firms

This refers to the total count of businesses operating within a specific market or industry.

U.S. Cigarette Industry

The industry comprising companies operating within the United States that manufacture, distribute, and sell cigarettes and related products.

Oligopoly

A market structure characterized by a small number of firms that dominate the market, leading to limited competition and potentially higher prices for consumers.