If you know the cross-price elasticity between two goods is positive,then it suggests that the two goods are:

A) substitutes.
B) complements.
C) normal goods.
D) inferior goods.

Question

If you know the cross-price elasticity between two goods is positive,then it suggests that the two goods are:A) substitutes.B) complements.C) normal goods.D) inferior goods.

Deborah Rollins · Accepted Answer

Final Answer : A, Explanation :  When the cross-price elasticity between two goods is positive, it suggests 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 substitutes, as consumers may choose to purchase the other good instead of the more expensive one.

If you know the cross-price elasticity between two goods is positive,then it suggests that the two goods are:

A) substitutes.
B) complements.
C) normal goods.
D) inferior goods.

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