If the Cross Elasticity of Demand Between Goods a and B

question 66

Multiple Choice

If the cross elasticity of demand between goods A and B is positive, then

• A)the demands for A and B are both price elastic.
• B)the demands for A and B are both price inelastic.
• C)A and B are complements.
• D)A and B are substitutes.
• E)A and B are independent goods.

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Definitions:

Purely Competitive

Describes a market structure where many small firms compete against each other, with no single entity able to control the market price.

Marginal Cost

The cost of producing one additional unit of a good, capturing how production costs change with the level of output.

Efficiently Allocated

A state where resources are distributed in a manner that maximizes the net benefits to society.

Marginal Revenue

The surplus income generated by a company through the sale of one extra unit of a good or service.