Economics (AS & A Level) · May / June 2025 · Paper 14 · Question 8
9708Price elasticity, income elasticity and cross elasticity of demand
A survey into the market for good X found that it is an inferior good and a close substitute for good Y. Which values for the income elasticity of demand for good X and its cross elasticity of demand with respect to the price of good Y would support this?
- Aincome elasticity –1.2; cross elasticity –0.9
- Bincome elasticity –1.2; cross elasticity +0.9
- Cincome elasticity +1.2; cross elasticity –0.9
- Dincome elasticity +1.2; cross elasticity +0.9
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Correct answer: B. income elasticity –1.2; cross elasticity +0.9
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