Two items which have a positive cross price elasticity of demand are referred to as
A) luxury goods.
B) inferior goods.
C) substitutes.
D) complements.

Question

Quizplus · Accepted Answer

If two goods have a positive cross price elasticity of demand, it means that when the price of one good increases, the demand for the other good also increases. This indicates that the two goods are substitutes for each other, as consumers are willing to switch to the other good when the price of one increases.

Two Items Which Have a Positive Cross Price Elasticity of Demand