Good a Has an Income Elasticity Equal to -1

question 114

Multiple Choice

Good A has an income elasticity equal to -1.0 and a cross price elasticity with respect to Good B of 0.9. Then:

• A)​Good A is an inferior good and Goods A and B are substitutes.
• B)​Good A is an inferior good and Goods A and B are complements.
• C)​Good A is a normal good and Goods A and B are substitutes.
• D)​Good A is a normal good and Goods A and B are complements.

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