If the cross-price elasticity of two goods is positive,then those two goods are
A) substitutes.
B) complements.
C) normal goods.
D) inferior goods.

Question

Quizplus · Accepted Answer

A positive cross-price elasticity indicates that an increase in the price of one good leads to an increase in the demand for the other good. This is indicative of substitutability, where consumers switch to the other good when the price of one good becomes too high. Therefore, the correct choice is A) substitutes.

If the Cross-Price Elasticity of Two Goods Is Positive,then Those