If two goods are substitutes, the cross-price elasticity of demand between the goods lies between _____.
A) 0 and 0.5
B) -0.5 and +0.5
C) 0 and ∞
D) ∞ and -∞

Question

Quizplus · Accepted Answer

The cross-price elasticity of demand between two substitute goods is positive, indicating that as the price of one good increases, the demand for the other good also increases. It can range from 0 to ∞, depending on how close the substitutes are.

If Two Goods Are Substitutes, the Cross-Price Elasticity of Demand