Suppose the Cross Elasticity of Demand Between Two Goods,X and Y,is

question 113

Multiple Choice

Suppose the cross elasticity of demand between two goods,X and Y,is negative.If the price of X decreases,the quantity demanded will

• A)rise for both goods.
• B)fall for both goods.
• C)rise for X and fall for Y.
• D)fall for X and rise for Y.
• E)not change.

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Definitions:

Perfect Complements

Goods that are often consumed together in fixed proportions, such that demand for one increases demand for the other.

Cardinal Utility Functions

Utilize numerical values to represent the level of satisfaction or utility that consumers derive from different bundles of goods and services.

Ordinal Utility Functions

A representation of a consumer's preference ranking for different bundles of goods, without specifying the exact level of satisfaction.

Basic Assumptions

Foundational beliefs or principles that are accepted as true without proof, forming the basis of further argument or reasoning.