Cross-Price Elasticity of Demand

Cross-Price elasticity of demand:

Two goods whose cross-price elasticity is positive, are substitutes.

Two goods whose cross-price elasticity is negative, are complements.

For substitute goods, an increase in the price of one good would shift the demand curve for the other good upward and to the right.

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[Practice Problems] Movement along the demand curve for good X occurs due to a change in:

A. income.

B.the price of good X.

C. the price of a substitute for good X.