When Two Goods Have Positive Cross Elasticities of Demand and Negative

question 191

Multiple Choice

When two goods have positive cross elasticities of demand and negative income elasticities, they are:

• A)​Normal and substitutes.
• B)​Normal and complements.
• C)​Inferior and substitutes.
• D)​Inferior and complements.

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Definitions:

Fire Extinguishers

Safety devices used to extinguish or control small fires, often in emergency situations.

External Benefit

A positive effect on a third party or the society at large, generated by the production or consumption of a good or service.

Externalities

Costs or benefits of a market activity borne by a third party; can be negative (costs) or positive (benefits).

Private Solutions

Solutions derived from individual or corporate initiatives without direct government intervention or subsidies.