The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1

-When the cross-price elasticity of demand for two goods is a positive number, one can correctly conclude that:
A)the goods are normal goods.
B)the goods are inferior goods.
C)the goods are substitutes.
D)the goods are complements.
E)total revenue will increase when the price increases.

Question

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
 
-When the cross-price elasticity of demand for two goods is a positive number, one can correctly conclude that:
A)the goods are normal goods. 
B)the goods are inferior goods. 
C)the goods are substitutes. 
D)the goods are complements. 
E)total revenue will increase when the price increases.

Quizplus · Accepted Answer

If the cross-price elasticity of demand for two goods is a positive number, it means that an increase in the price of one good leads to an increase in the quantity demanded of the other good. This indicates that the two goods are substitutes, as consumers are willing to switch from one good to another when the price of one of them increases.

The Figure Given Below Shows the Demand Curves for Five