If the cross-price elasticity between two goods is positive, then it is most likely that the two goods are
A)both inferior goods.
B)both luxury goods.
C)complements.
D)substitutes.
E)necessities.

Question

Quizplus · Accepted Answer

If the cross-price elasticity between two goods is positive, it means that an increase in the price of one good leads to an increase in demand for the other good. This suggests that the two goods are substitutes, as consumers are willing to switch from one good to the other when the price of one increases.

If the Cross-Price Elasticity Between Two Goods Is Positive, Then