If two goods are substitutes, then their cross-price elasticity of demand is:
A) positive.
B) negative.
C) zero.
D) between zero and minus one.

Name: If two goods are substitutes, then their cross-price elasticity of demand is: A) positive. B) negative. C) zero. D) between zero and minus one.
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Question

Quizplus · Accepted Answer

If two goods are substitutes, an increase in the price of one leads to an increase in the demand for the other. Therefore, the cross-price elasticity of demand is positive.

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