If the cross-price elasticity of demand between two products is positive,we can conclude that the two products are substitutes.

Question

Quizplus · Accepted Answer

A positive cross-price elasticity of demand indicates that an increase in the price of one product leads to an increase in demand for the other product. This suggests that the two products are substitutes as consumers are willing to switch from one product to the other in response to a change in price.

If the Cross-Price Elasticity of Demand Between Two Products Is