Exhibit 19-4

-Refer to Exhibit 19-4. As a consequence of the depicted change in supply of X, the demand curve for Y shifted from D₁ to D₂. What is true of the cross elasticity of demand for Y?

Question

Exhibit 19-4 -Refer to Exhibit 19-4. As a consequence of the depicted change in supply of X, the demand curve for Y shifted from D₁ to D₂. What is true of the cross elasticity of demand for Y? A)E_c > 0 B)E_c < 0 C)E_c = 0 D)It cannot be determined from the information provided.

Quizplus · Accepted Answer

The shift in the demand curve for Y as a result of a change in the supply of X indicates that the two goods are related. Since the demand for Y increases when the supply of X changes, it suggests that X and Y are substitutes, leading to a positive cross elasticity of demand for Y (E_c > 0).

Exhibit 19-4 ​

Exhibit 19-4