When cross elasticity of demand is a large positive number, one can conclude that
A. The good is normal
B. The good is inferior
C. The good is a substitute
D. The good is complement
Answer: Option C
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Related Questions on Economics
The capital that is consumed by an economy or a firm in the production process is known as
A. Capital loss
B. Production cost
C. Dead-weight loss
D. Depreciation
Who propounded the opportunity cost theory of international trade?
A. Ricardo
B. Marshall
C. Heckscher & Ohlin
D. Haberler
Which among the following statement is INCORRECT?
A. On a linear demand curve, all the five forms of elasticity can be depicted
B. If two demand curves are linear and intersecting each other, then, coefficient of elasticity would be same on different demand curves at the point of intersection.
C. If two demand curves are linear and parallel to each other, then, at a particular price, the coefficient of elasticity would be different on different demand curves.
D. The price elasticity of demand is expressed in terms of relaive not absolute changes in Price and Quantity demanded.
A. Increase
B. Decrease
C. Remain the same
D. Become zero
Correct option is C. two products are substitute goods
A positive cross elasticity of demand means that the demand for good A will increase as the price of good B goes up and vice versa. Hence, correct answer is option C not D
Go for explanation.
As per explanation option D is the right ans
Answer shows as option C and explanation says about option D
The answer shows as option C...which is the good is a substitute
but the explanation is correct.