Suppose Goods a and B Are Substitutes for Each Other

question 152

Multiple Choice

Suppose goods A and B are substitutes for each other.We would expect the cross-price elasticity between these two goods to be

• A)positive.
• B)negative.
• C)either positive or negative.It depends whether A and B are normal goods or inferior goods.
• D)either positive or negative.It depends whether the current price level is on the elastic or inelastic portion of the demand curve.

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Definitions:

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