If the cross price elasticity of demand between two goods is positive, then the two goods are
A) substitutes.
B) complements.
C) independent.
D) unrelated.

Question

Quizplus · Accepted Answer

A positive cross-price elasticity of demand indicates that the two goods are substitutes. This means that an increase in the price of one good will lead to an increase in the demand for the other good, as consumers switch from the more expensive good to the cheaper alternative.

If the Cross Price Elasticity of Demand Between Two Goods