If two goods are substitutes, their cross-price elasticity of demand should be:
A)less than 0.
B)negative yet almost equal to 0.
C)equal to 0.
D)greater than 0.

Question

Quizplus · Accepted Answer

If two goods are substitutes, an increase in the price of one good will lead to an increase in the demand for the other good. This relationship is reflected in the positive value of the cross-price elasticity of demand. Therefore, the correct answer is D, greater than 0.

If Two Goods Are Substitutes, Their Cross-Price Elasticity of Demand