If two products are substitute goods, the value of cross elasticity will be ___________.

negative

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positive

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zero

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no cross elasticity exists between two substitute products

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Solution

The correct option is B positive
In the case of perfect substitutes, the cross elasticity of demand will be equal to positive infinity.
Substitutes: Two goods that are substituted have a positive cross elasticity of demand: as the price of good Y rises, the demand for good X rises.

Suggest Corrections

List - I	List - II
(a) Cross elasticity is zero	1. $P r i c e = A V C$
(b) Shut-down point	2. Two commodities are independent
(c) Slutsky theorem	3. Transformation line
(d) Production Possibility Curve	4. Substitution effect