When two goods are substitutes for each other,what will the cross-price elasticity be?
A) The cross-price elasticity will initially be positive but eventually become negative.
B) It is unaffected by goods being substitutes.
C) It will be zero.
D) It will be positive.
E) It will be negative.

Question

Quizplus · Accepted Answer

When two goods are substitutes for each other, an increase in the price of one good leads to an increase in demand for the other good. This results in a positive cross-price elasticity, indicating that the goods are substitutes for each other. Therefore, the correct answer is D.

When Two Goods Are Substitutes for Each Other,what Will the Cross-Price