If the cross-price elasticity between good X & Y is positive, we know the goods are:
A)inferior goods.
B)complements.
C)inelastic.
D)substitutes.

Question

Quizplus · Accepted Answer

A positive cross-price elasticity signifies that an increase in the price of good Y results in an increase in the quantity demanded of good X. This indicates that the two goods are substitutes, meaning that consumers can switch between them depending on their relative prices. Therefore, the correct answer is D - substitutes.

If the Cross-Price Elasticity Between Good X & Y Is