If the cross-price elasticity of demand between Good x and Good y is 0.4, then:
A)the demand for good x is highly responsive to changes in the price of good y.
B)a 10 percent increase in the price of good y leads to a 0.4 percent increase in the quantity demanded of good x.
C)a 10 percent decrease in the price of good y leads to a 4 percent decrease in the demand for good y.
D)good x and good y are complements.
E)good x is a normal good and good y is an inferior good.

Question

If the cross-price elasticity of demand between Good x and Good y is 0.4, then:​
A)the demand for good x is highly responsive to changes in the price of good y.
B)a 10 percent increase in the price of good y leads to a 0.4 percent increase in the quantity demanded of good x.
C)a 10 percent decrease in the price of good y leads to a 4 percent decrease in the demand for good y.
D)good x and good y are complements.
E)good x is a normal good and good y is an inferior good.

Quizplus · Accepted Answer

The Answer of If the cross-price elasticity of demand between Good x and Good y is 0.4, then:​
A)the demand for good x is highly responsive to changes in the price of good y.
B)a 10 percent increase in the price of good y leads to a 0.4 percent increase in the quantity demanded of good x.
C)a 10 percent decrease in the price of good y leads to a 4 percent decrease in the demand for good y.
D)good x and good y are complements.
E)good x is a normal good and good y is an inferior good.

If the Cross-Price Elasticity of Demand Between Good X and Good