The cross-price elasticity of demand between pancakes and waffles is positive. This indicates all of the following except one. Which is the exception?
A)Pancakes and waffles are substitutes.
B)An increase in the price of pancakes will shift the demand curve for waffles to the right.
C)An increase in the price of waffles will shift the demand curve for pancakes to the right.
D)A decrease in the supply of waffles will shift the demand curve for pancakes to the right.
E)The demand for pancakes and the demand for waffles are price elastic.

Question

The cross-price elasticity of demand between pancakes and waffles is positive. This indicates all of the following except one. Which is the exception?​
A)Pancakes and waffles are substitutes.
B)An increase in the price of pancakes will shift the demand curve for waffles to the right.
C)An increase in the price of waffles will shift the demand curve for pancakes to the right.
D)A decrease in the supply of waffles will shift the demand curve for pancakes to the right.
E)The demand for pancakes and the demand for waffles are price elastic.

Quizplus · Accepted Answer

The cross-price elasticity of demand being positive indicates that pancakes and waffles are substitutes, meaning that an increase in the price of one leads to an increase in the demand for the other. However, it does not provide information about the price elasticity of demand for either product individually.

The Cross-Price Elasticity of Demand Between Pancakes and Waffles Is