If the cross-price elasticity of demand between two goods is 0.25, then we know that these goods are _____ because the cross-price elasticity of demand is _____.
A) substitutes; greater than zero
B) complements; less than one
C) substitutes; less than one
D) complements; greater than zero

Question

Quizplus · Accepted Answer

The cross-price elasticity of demand being positive (greater than zero) indicates that the two goods are substitutes, as the demand for one increases when the price of the other increases.

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