The cross price elasticity of demand between two goods is 2. We may conclude that
A) the two goods are very complementary and probably are sold together.
B) the two goods are poor substitutes for each other.
C) the demand for one of the goods is likely to be fairly elastic and the demand for the other good is likely to be fairly inelastic.
D) the demand for each of the goods is likely to be very elastic.

Question

Quizplus · Accepted Answer

A cross price elasticity of 2 indicates that the goods are substitutes, and a high positive value suggests that the demand for each good is likely to be very elastic.

The Cross Price Elasticity of Demand Between Two Goods Is