What is the significance of a positive cross-elasticity coefficient between products X and Y?
A)The demand for both products must be elastic.
B)The demand for both products must be inelastic.
C)Products X and Y must be substitutes.
D)Products X and Y must be complements.
E)There is no significance since all calculations of cross elasticity are positive.

Question

Quizplus · Accepted Answer

A positive cross-elasticity coefficient between products X and Y indicates that when the price of product X increases, the demand for product Y also increases. This suggests that products X and Y are substitutes for each other, meaning that consumers view them as interchangeable options.

What Is the Significance of a Positive Cross-Elasticity Coefficient Between