If the cross-price elasticity of salt and pepper is positive the goods must be complements.

Question

Quizplus · Accepted Answer

If the cross-price elasticity of two goods is positive, it indicates that an increase in the price of one good leads to an increase in the quantity demanded of the other good. This is characteristic of substitute goods, not complementary goods. Therefore, if the cross-price elasticity of salt and pepper is positive, it means that they are substitutes, not complements.

If the Cross-Price Elasticity of Salt and Pepper Is Positive