If the cross elasticity of demand between goods A and B is positive
A) the demands for A and B are both price elastic.
B) the demands for A and B are both price inelastic.
C) A and B are complements.
D) A and B are substitutes.

Question

Quizplus · Accepted Answer

A positive cross elasticity of demand indicates that as the price of one good increases, the demand for the other good also increases, which is characteristic of substitute goods.

If the Cross Elasticity of Demand Between Goods a and B