Question

Substitutes have a(n): Please choose the correct answer from the following choices, and then select the submit answer button. income elasticity of demand greater than 1. negative cross elasticity of demand. Incorrect: zero cross elasticity of demand. zero cross elasticity of demand. positive cross elasticity of demand.

Answer 1

Answer: positive cross elasticity of demand.

   

Explanation: In simple words, cross elasticity refers to the degree of change in the demand of a good with respect to change in the price of another goods.

In case of substitute goods, one good can easily be used in the place of another good. Thus, if the price of one good increases the demand for its substitute good also increases.

Hence from the above we can conclude that substitute goods have positive cross elasticity.