Question

Two goods are _____________ if their cross-price elasticity is 0.5. A good is a(n) ______ good if its income elasticity of demand is 0.5.

Group of answer choices：

Weak substitutes: Necessity

Close substitutes: Luxury

Weak complements: Normal

Close complements: Inferior

Answer 1

If the value of cross price elasticities of demand is positive then the two goods are substitues to  to each other

Substitutes are those goods which can replace each other for example tea and coffee

so here the value of cross price elasticity of demand is 0.5 so the two goods are substitutes but the value is less so they are weak substitutes

if the value of cross price elasticity of demand is negative then the two goods are compliments to each other

now when we talk about normal good then if the value of income elasticity of demand is positive and less than 1 then the good is said to be necessity

if the value of income elasticity of demand is positive but greater than 1 then the good is said to be luxury good

so the correct answer clearly here is option a