Considering the concept of cross-price elasticity,when two goods are substitutes:
A)an increase in the price of one will cause an increase in the quantity demanded of the other.
B)an increase in the price of one will cause a decrease in the quantity demanded of the other.
C)a decrease in the price of one will cause an increase in the quantity demanded of the other.
D)Any of these may be true.

Question

Quizplus · Accepted Answer

When two goods are substitutes, an increase in the price of one good will lead to an increase in the quantity demanded of the other good, as consumers switch to the cheaper alternative.

Considering the Concept of Cross-Price Elasticity,when Two Goods Are Substitutes