If commodities X and Y are substitute, their cross elasticity of demand will be
ECONOMICS
JAMB 2023
If commodities X and Y are substitute, their cross elasticity of demand will be
- A. One
- B. positive
- C. negative
- D. zero
Correct Answer: B. positive
Explanation
Cross elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good. If two goods are substitutes, an increase in the price of one will lead to an increase in demand for the other, and vice versa. Therefore, the cross elasticity of demand for substitutes is positive.
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