If two goods,X and Y,have a positive cross elasticity of demand,then we know that they
A)are both normal goods.
B)are complements.
C)are both inferior goods.
D)each have a price elasticity greater than one.
E)are substitutes.

Question

Quizplus · Accepted Answer

A positive cross elasticity of demand indicates that the two goods are substitutes, meaning that an increase in the price of one good will lead to an increase in the demand for the other.

If Two Goods,X and Y,have a Positive Cross Elasticity of Demand,then