If the cross-price elasticity of demand between goods X and Y is 0.9 this means:
A)the two goods are complements and demand is elastic
B)the two goods are complements and the demand is inelastic
C)the two goods are substitutes and the demand is elastic
D)the two goods are substitutes and the demand is inelastic

Question

Quizplus · Accepted Answer

A positive cross-price elasticity of demand indicates that the two goods are substitutes. A value of 0.9 suggests that the demand is inelastic, as it is less than 1.

If the Cross-Price Elasticity of Demand Between Goods X and Y