Asked by Martie Coleman on May 30, 2024
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If the cross-price elasticity of demand for two goods is negative, then the two goods are substitutes.
Cross-Price Elasticity
A measure of how the demand for one good changes in response to a change in the price of another good.
Substitutes
Products or services that can be used in place of one another; when the price of one increases, the demand for the other may increase as consumers switch to the cheaper option.
Negative
A term indicating something less than zero or lacking in positivity, often used in financial contexts.
- Absorb the theory of cross-price elasticity of demand and its impact on the linkage between commodities.
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Learning Objectives
- Absorb the theory of cross-price elasticity of demand and its impact on the linkage between commodities.
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