If the cross elasticity of demand between goods A and B is positive,then
A)the demands for A and B are both price elastic.
B)the demands for A and B are both price inelastic.
C)A and B are complements.
D)A and B are substitutes.
E)A and B are inferior goods.

Question

Quizplus · Accepted Answer

When the cross elasticity of demand between goods A and B is positive, it means that the goods are substitutes for each other. This is because an increase in the price of one good (say A) will lead to an increase in the demand for the other good (B), as consumers switch from A to B. Therefore, choice D is the correct answer.

If the Cross Elasticity of Demand Between Goods a and B