The cross price elasticities among substitute goods will be extremely high when
A) b and d
B) they are very similar to each other
C) people are consuming them frequently
D) people consume them in equal quantities
E) they are imperfect substitutes

Question

Quizplus · Accepted Answer

Substitute goods with very high cross-price elasticities are those that are very similar to each other, as consumers can easily switch from one product to another if the price of one increases, indicating a strong substitution effect.

The Cross Price Elasticities Among Substitute Goods Will Be Extremely