If the cross-price elasticity of demand between Breeze Detergent and Gain Detergent is a relatively large positive number, then it indicates that
A) the two brands are probably made by the same company.
B) the two brands of detergent are close substitutes.
C) consumers have a distinct preference for one brand versus the other.
D) detergents are necessities.

Question

Quizplus · Accepted Answer

A relatively large positive cross-price elasticity of demand indicates that as the price of one good increases, the demand for the other good also increases, suggesting that the two goods are close substitutes.

If the Cross-Price Elasticity of Demand Between Breeze Detergent and Gain