Interpret the results for the price income,and cross elasticities calculated above.

Let's interpret the elasticity values you've calculated.

• Income Elasticity of Demand (YED) = -0.16: Since the income elasticity of demand is negative, the good is an inferior good. This means that as income increases, the demand for the good decreases. The value of -0.16 indicates that demand for this good is income inelastic; a 1% increase in income leads to a 0.16% decrease in quantity demanded.

• Cross Elasticity of Demand (XED) = -0.35: Since the cross elasticity of demand is negative, the two goods (Good X and Good Y) are complementary goods. This means that an increase in the price of Good Y leads to a decrease in the demand for Good X. The value of -0.35 indicates that the relationship is inelastic; a 1% increase in the price of Good Y leads to a 0.35% decrease in the quantity demanded of Good X.

The price elasticity of demand was not calculated in the previous problems.