Suppose the Cross-Price Elasticity of Demand Between Goods X and Y

question 87

Multiple Choice

Suppose the cross-price elasticity of demand between goods X and Y is 0.15 and the cross-price elasticity of demand between goods X and Z is 1.3. Which of the following statements is true?

• A) X and Y are complements, while X and Z are substitutes.
• B) X and Y are weak complements, while X and Z are strong complements.
• C) X and Y are strong complements, while X and Z are weak complements.
• D) Y is a necessity and Z is a luxury.

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Definitions:

Linear Regression Equation

An equation used in statistics to model the relationship between a dependent variable and one or more independent variables, assuming a linear relationship.

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A statistical relationship indicating no association between two variables.