Question

When the cross price elasticity between good X and other related goods is positive and very low firm X can be assumed to have?

a. minimal market power
b. moderate market power
c. a significant amount of market power
d. virtually no market power.

Answer 1

Answer:

c. a significant amount of market power 

Explanation:

Cross price elasticity measures the responsiveness of quantity demanded of a good to the changes in price of another good.

If the cross price elascitiy is postive, the goods are subsituites.

If the cross price elasticity is negative, the goods are complementary goods.

If the cross price elasticitiy is low the firm has market power. It means that it's consumers do not change the quantity demanded when the price of the good changes

If the cross price elasticitiy is high, the market has low market power.

I hope my answer helps you.