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The role of markets

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Question 10

An empirical economic study estimates that the income elasticity of demand (YED\text{YED}YED) for public bus transit in a metropolitan area is -0.35, while its cross-price elasticity of demand (XED\text{XED}XED) with respect to the price of petrol is +0.65.

Which of the following combinations correctly classifies public bus transit and describes its relationship with petrol?

Classification of public bus transit: Normal good; Relationship with petrol: Complements

Classification of public bus transit: Inferior good; Relationship with petrol: Substitutes

Classification of public bus transit: Inferior good; Relationship with petrol: Complements

Classification of public bus transit: Normal good; Relationship with petrol: Substitutes

The role of markets Questions

  1. A Level
  2. /Economics
  3. /The role of markets