You have the following information for goods X and Y: Goods Price elasticity Cro

ID: 1189034 • Letter: Y

Question

You have the following information for goods X and Y:

Goods Price elasticity Cross-price elasticity Income elasticity

X -0.4 -0.7 -1.8

Y -0.9 -0.7 0.6

Fill out the spaces in the following statements:

Based on the price elasticity, we can say that good X is price ___________________

Based on the cross-price elasticity, we can say that goods X and Y are _______________

Based on the income elasticity, we can say that good Y is _________________

Based on the price elasticity, we can say that good X is price elastic. Because price elasticity is always negative for elastic goods.

Based on the cross-price elasticity, we can say that goods X and Y are complements. Because complementary goods have negative cross elasticity.

Based on the income elasticity, we can say that good Y is a normal good. Because normal goods have a positive income elasticity of demand.

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