The Income Elasticities of Products a and B and Their

question 12

Multiple Choice

The income elasticities of Products A and B and their cross-price elasticities with respect to Product C are as follows: From this information,one can conclude that:

• A)Product A is inferior,Product B is normal,Product A is a complement to Product C,and Product B is a substitute for Product C.
• B)Product A is normal,Product B is inferior,Product A is a complement to Product C,and Product B is a substitute for Product C.
• C)Product A is normal,Product B is inferior,Product A is a substitute for Product C,and Product B is a complement to Product C.
• D)Product A is inferior,Product B is normal,Product A is a substitute for Product C,and Product B is a complement to Product C.

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Definitions:

In-Kind Transfers

Transfers of goods or services from one party to another as a form of payment or aid, rather than transferring cash.

Economic Pie

A metaphorical representation of a nation's total economic output, suggesting how much wealth is available for distribution among its population.

Same Income

A situation where two or more individuals or entities earn an identical amount of money over a given period.

Poverty Threshold

The minimum income level deemed necessary to achieve an adequate standard of living in a given country or region.