WAEC Economics 2017 Objective — Question 6
Question 6 of 50 from the West African Examinations Council (WAEC) Economics 2017 Objective paper, with the correct answer and a full explanation.
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If the coefficient of cross elasticity of demand for goods Y and Z is positive, the two goods are
- A. A. complements
- B. B. substitutesCorrect
- C. C. luxuries
- D. D. inferior
Explanation
If the coefficient of cross elasticity of two goods (say x and 2) is positive, it means that as the price of one increases, the quantity demanded of the other increases. This is a result of decrease in quantity demanded of the one with increased price — indicating the goods are substitutes.
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