Good X and good Y are substitutes if the
A) income elasticity of each is negative.
B) income elasticity of each is positive.
C) cross-price elasticity is negative.
D) cross-price elasticity is positive.

Question

Quizplus · Accepted Answer

When two goods are substitutes, an increase in the price of one leads to an increase in the demand for the other, which is indicated by a positive cross-price elasticity.

Good X and Good Y Are Substitutes If the