If two commodities are substitutes,then
A)they tend to be used together by consumers
B)their prices are generally regulated by the government
C)an increase in the price of one of them increases the supply of the other
D)the cross-price elasticity of demand is positive
E)the cross-price elasticity of demand is negative

Question

Quizplus · Accepted Answer

If two commodities are substitutes, an increase in the price of one of them will lead to an increase in the demand for the other, hence the cross-price elasticity of demand is positive. For example, if the price of coffee increases, consumers might switch to tea, leading to an increase in the demand for tea.

If Two Commodities Are Substitutes,then