Refer to the information provided in Figure 5.5 below to answer the question that follows. Figure 5.5
-Refer to Figure 5.5. As the price of good W increased, the demand for good Y shifted from D1 to D2. The cross-price elasticity of demand between W and Y is
A) positive.
B) negative.
C) zero.
D) indeterminate from this information.

Question

Refer to the information provided in Figure 5.5 below to answer the question that follows.  Figure 5.5
-Refer to Figure 5.5. As the price of good W increased, the demand for good Y shifted from D1 to D2. The cross-price elasticity of demand between W and Y is
A) positive. 
B) negative. 
C) zero. 
D) indeterminate from this information.

Quizplus · Accepted Answer

The cross-price elasticity of demand is positive when the demand for one good increases as the price of another good increases, indicating that the two goods are substitutes. Since the demand for good Y increased when the price of good W increased, they are likely substitutes, resulting in a positive cross-price elasticity.

Refer to the Information Provided in Figure 5