Good X and Good Y Are Related Goods

question 136

Multiple Choice

Good X and Good Y are related goods. When the price of good X rises by 20 percent, the quantity demanded for good Y falls by 40 percent. What is the cross-price elasticity?

• A) 2
• B) 4
• C) -0.5
• D) -2

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Definitions:

Error

A mistake or inaccuracy, often due to oversight or misunderstanding, which can affect outcomes or validity.

Judgment

The faculty to formulate thoughtful decisions or derive sound conclusions.

Representation Heuristic

A cognitive shortcut that involves making a decision based on how much something resembles a typical case.

Error

A mistake or inaccuracy in action, calculation, opinion, or judgment caused by poor reasoning or misunderstanding.