The cross-price elasticity of demand between two differentiated goods produced by firms in the same industry will be
A) negative and large.
B) negative and small.
C) positive and large.
D) positive and small.

Question

Quizplus · Accepted Answer

The cross-price elasticity of demand between two differentiated goods produced by firms in the same industry is typically positive and large, indicating that as the price of one good increases, the demand for the other good also increases significantly, as consumers view these goods as substitutes.

The Cross-Price Elasticity of Demand Between Two Differentiated Goods Produced