Q59
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
AnswerD.
The good is complement
Answer: Option C
Solution
Answer: Option C
Solution:
When cross elasticity of demand is a large positive number, one can conclude that the good is complement. Two goods that complement each other have a negative cross elasticity of demand: as the price of good Y rises, the demand for good X falls.