Question on: WAEC Economics - 2017
if the coefficient of cross elasticity of demand for goods Y and Z is positive, the two goods are?
A
complements
B
substitutes
C
luxurious
D
inferior
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Correct Option: B
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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