Question on: JAMB Economics - 2023
If commodities X and Y are substitute, their cross elasticity of demand will be
A
One
B
positive
C
negative
D
zero
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Correct Option: B
If commodities X and Y are substitutes, their cross elasticity of demand will be positive. Substitutes are goods that can be used in place of each other. When the price of one substitute (e.g., X) increases, the demand for the other substitute (e.g., Y) tends to increase as consumers shift their preference. As a result, the cross elasticity of demand is positive.
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