If the cross-price elasticity of demand of two goods is positive, we can conclude that the two goods are:
A) normal goods.
B) inferior goods.
C) substitutes.
D) complements.

Question

Quizplus · Accepted Answer

A positive cross-price elasticity of demand indicates that when the price of one good increases, the demand for the other good also increases. This suggests that the two goods are substitutes, as consumers are willing to switch from one good to the other in response to a change in price.

If the Cross-Price Elasticity of Demand of Two Goods Is