Question

If consumers consider beer and wine substitute goods, the products would have a __________ cross-elasticity of demand and an increase in the price of beer would result in a(n) __________ in the demand for wine.

Answer 1

Answer:

The correct to the first fill in the blank is positive and answer to second fill in the blank is increase .

Explanation:

Cross price elasticity of demand can be defined as the measurement of change in quantity demanded one good that is in response to the change in price of another good.

Cross price elasticity of demand is said to be positive when the gods are substitute, which means that if there is an increase in price of one good than there will increase in demand of other good, same way if there is decrease in price of one good than there will be decrease in demand of other good.