If the cross-price-elasticity of goods X and Y is positive,then the sales of X move:
A) in the same direction as the price of Y,and X and Y are complementary goods.
B) in the opposite direction as the price of Y,and X and Y are complementary goods.
C) in the opposite direction as the price of Y,and X and Y are substitute goods.
D) in the same direction as the price of Y,and X and Y are substitute goods.

Question

Quizplus · Accepted Answer

A positive cross-price elasticity means that the two goods are substitutes, as an increase in the price of Y will lead consumers to shift their demand to the relatively cheaper X, leading to an increase in the sales of X.

If the Cross-Price-Elasticity of Goods X and Y Is Positive,then