If the cross-price elasticity of demand is positive,then the
A)two goods are complements
B)two goods are substitutes
C)two goods have no relationship to each other
D)price is below the equilibrium
E)price is above the equilibrium

Question

Quizplus · Accepted Answer

A positive cross-price elasticity of demand indicates that the two goods are substitutes, meaning that an increase in the price of one good will result in an increase in the quantity demanded of the other good.

If the Cross-Price Elasticity of Demand Is Positive,then the