Consider electricity and natural gas as alternative and substitute energy sources. In this scenario, we predict the cross-price elasticity of demand coefficieint for these two power sources to be negative (Ex

Question

Consider electricity and natural gas as alternative and substitute energy sources. In this scenario, we predict the cross-price elasticity of demand coefficieint for these two power sources to be negative (Ex<0)

Quizplus · Accepted Answer

True consumer substitute products have a positive cross-price elasticity coefficient. Assume that A and B are subsitutes; then an increase in the price of a product A causes an increase in the demand for its subsitute (Product B)

Consider Electricity and Natural Gas as Alternative and Substitute Energy