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:

Attractive Forces

Forces that cause particles or objects to come together, commonly found in physics and chemistry, such as gravitational or electromagnetic forces.

Endorphins

Neurochemicals produced by the body that act as natural painkillers and are associated with feelings of pleasure and euphoria.

Pain Perception

The subjective process by which the brain interprets signals from the body signaling harm or potential harm, resulting in the experience of pain.

Endogenous Substance

A compound or chemical that is produced within an organism or a biological system rather than being introduced from the environment.