The larger the positive cross elasticity coefficient of demand between products X and Y, the
A)stronger their complementariness.
B)greater their substitutability.
C)smaller the price elasticity of demand for both products.
D)less sensitive purchases of each are to increases in income.

Question

Quizplus · Accepted Answer

The cross elasticity of demand measures how the quantity demanded of one good responds to a change in the price of another good. A larger positive cross elasticity coefficient indicates that as the price of one product increases, the demand for the other product also increases, suggesting that the two products are substitutes rather than complements.

The Larger the Positive Cross Elasticity Coefficient of Demand Between