Question

Which pairs of commodities are complements based on the given price and cross-price elasticities?

a. W and X
b. W and Y
c. W and Z
d. X and Y

Answer 1

Complementary pairs based on the given price and cross-price elasticities are W and Z, and X and Y.

Step-by-step explanation:

Based on the given price and cross-price elasticities, the pairs of commodities that are complements are:

1. W and Z
2. X and Y

A complement good has a negative cross-price elasticity, meaning that when the price of one good increases, the quantity consumed of the complement good decreases. In this case, W and Z are complements because when the price of Z increases, the quantity consumed of W decreases. Similarly, X and Y are complements because when the price of Y increases, the quantity consumed of X decreases.