The cross-elasticity of demand of good S with respect to the price of good P is +1.5.
The cross-elasticity of demand of good S with respect to the price of good R is –1.5.
The cross-elasticity of demand of good P with respect to the price of good R is –1.5.
What can be concluded about goods P, R and S?
1 )
S and P are complements; P and R are substitutes.
2 )
S and P are complements; R is an inferior good.
S and P are substitutes; P and R are complements.
4 )
S and P are substitutes; R is an inferior good.
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