Answer to Question #274410 in Economics of Enterprise for jiv

Question

The following table showed the cross price elasticities between price of product X with the quantity demanded for product Y, Z, R, and S, respectively.

       Types of Product            cross price elasticities     Y2.5Z0.1R-0.5S0.0

The conclusion is _________________________.

Select one:

a.

product Y and X is complement product.

b.

R and X is complement product. 

c.

Product X and R is substitution product.

d.

Y and S is substitution product.

Answer 1

Correct option: b. R and X is complement product.

The price elasticity of demand between product X and R is negative, so they are complement of each other.