Economics • Economic BasicsEasy
Which of the following defines 'Cross-Price Elasticity of Demand' for substitute goods?
A. Negative
B. Positive✓ Correct Answer
C. Zero
D. Infinite
💡 Solution & Explanation
Cross-price elasticity of demand for substitute goods is positive because an increase in the price of one good causes consumers to purchase more of the substitute. For complementary goods, this elasticity value is negative. A zero cross-price elasticity indicates unrelated goods.
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