If the cross elasticity of demand between goods A and B is positive, then
A)the demands for A and B are both price elastic.
B)the demands for A and B are both price inelastic.
C)A and B are complements.
D)A and B are substitutes.
E)A and B are independent goods.

Question

Quizplus · Accepted Answer

A positive cross elasticity of demand indicates that A and B are substitutes, meaning that an increase in the price of one will result in an increase in demand for the other.

If the Cross Elasticity of Demand Between Goods a and B