Blue pens and black pens are close substitutes. The cross elasticity of demand for black pens with respect to the price of blue pens is
A) zero.
B) negative.
C) equal to 1.
D) positive.

Question

Quizplus · Accepted Answer

The cross elasticity of demand between two substitutes is positive, indicating that as the price of one good (blue pens) increases, the demand for the substitute good (black pens) also increases.

Blue Pens and Black Pens Are Close Substitutes