Economics · Economics
Which of the following statements is correct regarding cross elasticity of demand between two goods?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Cross elasticity of demand is always negative.
- 2If two goods are complements, the cross elasticity of demand is positive.
- 3If two goods are completely unrelated, the cross elasticity of demand is unity.
- 4If two goods are perfect substitutes, the cross elasticity of demand is infinite.✓
Correct answer
If two goods are perfect substitutes, the cross elasticity of demand is infinite.
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