If the cross elasticity of demand between cheese and yogurt is positive, then:
A)the demand for cheese and the demand for yogurt are both price elastic.
B)the demand for cheese and the demand for yogurt are both price inelastic.
C)cheese and yogurt are complements.
D)cheese and yogurt are substitutes.

Question

Quizplus · Accepted Answer

A positive cross elasticity of demand indicates that cheese and yogurt are substitutes, meaning that an increase in the price of cheese would lead to an increase in the demand for yogurt, and vice versa.

If the Cross Elasticity of Demand Between Cheese and Yogurt