If the cross-price elasticity of demand is 6,Good A and Good B are
A) inferior goods.
B) complements.
C) substitutes.
D) normal goods.
E) luxury goods.

Question

Quizplus · Accepted Answer

A cross-price elasticity of demand of 6 indicates that an increase in the price of Good A will lead to a 6% increase in the demand for Good B. This is a strong indication that Good A and Good B are substitutes, meaning that consumers view them as interchangeable and will switch from one to the other depending on their relative prices.

If the Cross-Price Elasticity of Demand Is 6,Good a and Good