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andrew-mc [135]
3 years ago
11

Lorena considers coffee and tea to be substitutes. Therefore, the cross elasticity of demand between coffee and tea for Lorena m

ust be:
Social Studies
1 answer:
kirill [66]3 years ago
6 0

Answer:

Positive ,

A positive cross elasticity of demand means that two goods are substitutes.

Explanation:

The cross elasticity of demand for substitute goods is always positive in light of the fact that the demand for one good upsurges when the price for the substitute good increases. For instance, if the price of coffee rises, the quantity demanded for tea (a substitute brew) increases as consumers switch to a more affordable yet substitutable alternative. This is mirrored in the cross elasticity of demand formula as well. Both the numerator (% change in the demand of tea) and denominator (the price of coffee) show positive escalations.

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In a free market economy is where the individuals who are the producers, make their own decisions on what products to produce and sell.In this type of market, the government does not intervene. The advantage of this system is that producers have full control to produce products of their choice and they are more multivated to work and produce goods to earn money.This also boosts the economy growth by allowing the total control to the producers who produce goods according to the demand of the market.

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