If two goods are substitutes, the cross-price elasticity of demand must be:
A) negative.
B) positive.
C) zero.
D) infinite.

Question

Quizplus · Accepted Answer

If two goods are substitutes, an increase in the price of one good will lead to an increase in demand for the other good. This means that the cross-price elasticity of demand is positive, indicating a direct relationship between the price of one good and the demand for the other good.

If Two Goods Are Substitutes, the Cross-Price Elasticity of Demand