Economists Estimated That the Cross-Price Elasticity of Demand for Beer

question 79

Multiple Choice

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03.This means that

• A)beer and wine are substitutes and wine is an inferior good.
• B)beer and wine are complements and wine is a luxury good.
• C)beer and wine are substitutes and wine is a luxury good.
• D)beer and wine are complements and wine is an inferior good.

---

Definitions:

Income Distribution

The manner in which a nation’s total earnings are divided among its population, affecting economic equality.

Self-Interest

The motivation driving individuals to pursue their own advantages or benefits, often used in economic contexts to explain rational behavior.

Command Economies

Economic systems where the government or a central authority makes all decisions regarding production and distribution of goods and services.

Success Indicator

A measurable value or metric that demonstrates the effectiveness, achievement, or progress toward a specific goal or objective.