Suppose That the Cross Price Elasticity of Demand Between Goods

question 83

Multiple Choice

Suppose that the cross price elasticity of demand between goods Y and Z equals 1.5. Which of the following is TRUE?

• A) Goods Y and Z are complements because the cross price elasticity is greater than one.
• B) Goods Y and Z are complements because the cross price elasticity is positive.
• C) Goods Y and Z are substitutes because the cross price elasticity is greater than one.
• D) Goods Y and Z are substitutes because the cross price elasticity is positive.

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