If the coefficient of cross elasticity of demand for goods Y and Z is positive, the two goods are?

By: |Published on: Nov 6|Categories: Economics WAEC| 0 comments

A. complements
B. substitutes
C. luxurious
D. inferior

Correct Answer: Option B

B. substitutes

Explanation

A positive cross-price elasticity value indicates that the two goods are substitutes.

Two goods that complement each other have a negative cross elasticity of demand: as the price of goodY rises, the demand for good X falls.

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