Refer to the following: $$\begin{array} { l }
P _ { X } = 666 - 0.5 Q _ { X } - 2 Q _ { Y } \
P _ { Y } = 484.5 - 1.5 Q _ { Y } - 0.25 Q _ { X } \
M C _ { X } = 20 + 2 Q _ { X } \
M C _ { Y } = 4 + Q _ { Y }
\end{array}$$ Goods X and Y are:
A)normal
B)inferior
C)independent
D)substitutes
E)complements

Question

Refer to the following: $$\begin{array} { l } 
P _ { X } = 666 - 0.5 Q _ { X } - 2 Q _ { Y } \
P _ { Y } = 484.5 - 1.5 Q _ { Y } - 0.25 Q _ { X } \
M C _ { X } = 20 + 2 Q _ { X } \
M C _ { Y } = 4 + Q _ { Y }
\end{array}$$ Goods X and Y are:
A)normal
B)inferior
C)independent
D)substitutes
E)complements

Quizplus · Accepted Answer

To determine if the goods are substitutes or complements, we need to look at the cross-price elasticity of demand. 
$$\frac{\partial Q_X}{\partial P_Y}=\frac{-0.25}{-1.5/Q_Y}=0.167 Q_Y$$
Since the cross-price elasticity of demand is positive, X and Y are substitutes.

Refer to the Following Goods X and Y Are: A)normal B)inferior C)independent D)substitutes E)complements

Refer to the Following Goods X and Y Are:
A)normal
B)inferior
C)independent
D)substitutes
E)complements