QUESTIONS 33 THROUGH 44 RELATE TO ECONOMICS

33. - MOCK AND SAMPLE EXAMS CFA CFA LEVEL I MOCK EXAM AFTERNOON 2013 33. - MOCK AND SAMPLE EXAMS CFA CFA LEVEL I MOCK EXAM AFTERNOON 2013
MOCK AND SAMPLE EXAMS CFA CFA LEVEL I MOCK EXAM AFTERNOON 2013
33. The market demand function for item X is a function of its price, household income, and the price of item Y. Own-price elasticity of demand for X –0.8 Income elasticity of demand for X 1.5 Cross-price elasticity of demand for X with respect to the price of Y 0.4 Given the above elasticity coefficients for the two items, which of the following statements is most accurate? A. X and Y are substitutes. B. Demand for X is elastic. C. Item X is an inferior good.