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WAEC Economics 2017 Question 6

Question 6

Elasticity

If the coefficient of cross elasticity of demand for goods Y and Z is positive, the two goods are

  1. A.complements.
  2. B.substitutes.
  3. C.luxuries.
  4. D.inferior.
Show the answer and explanation

Answer: B (substitutes.)

Explanation

A rise in the price of one raises demand for the other, which happens with substitutes.