When two goods are substitutes,
A) the demands for both goods will be inelastic.
B) cross price elasticity of demand will be 0.
C) cross price elasticity of demand will be negative.
D) cross price elasticity of demand will be positive.

Question

Quizplus · Accepted Answer

When two goods are substitutes, an increase in the price of one good will lead to an increase in the demand for the other good, resulting in a positive cross price elasticity of demand.

When Two Goods Are Substitutes