There Are Three Goods You Are Interested in Purchasing, X

question 59

Multiple Choice

There are three goods you are interested in purchasing, X, Y and Z. You notice that the price of Z has fallen. Given that the cross price elasticity between Z and Y is − 1.5; the cross price elasticity between Y and X is 3.0, and the cross price elasticity between Z and X is 0.50. It would make sense that:

• A) Z and X are complements; Y and X are substitutes.
• B) Y and X are substitutes; Y is complementary to Z.
• C) X and Z are unrelated; Y is complementary to X.
• D) X and Z are complements; Y and Z are substitutes.

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Definitions:

Formal Group

A group that is usually governed by the formal structure of the organization.

Grapevine Network

Grapevine network signifies informal and unofficial channels of communication within an organization, often spreading rumors or unofficial information.

Formal Groups

Organized groups with defined structures and roles, typically formed within institutions or businesses for specific purposes.

Formalizing

The process of establishing official procedures or systems, often within organizational or legal contexts.