Cross elasticity of demand for
A)substitutes will normally be positive.
B)complements will normally be positive.
C)substitutes will normally be negative.
D)complements will normally be infinite.

Question

Quizplus · Accepted Answer

Cross elasticity of demand measures the responsiveness of demand for one good to a change in the price of another good. If the two goods are substitutes, then an increase in the price of one good will lead to an increase in demand for the other good. As a result, the cross elasticity of demand will be positive.

Cross Elasticity of Demand for