If two goods X and Y are substitute goods, what will be the cross elasticity of demand?

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KollegeApply · Accepted Answer

Positive Explanation: Cross elasticity of demand is said to be positive, when increase in the price of one commodity (Y) leads to an increase in the demand for the other commodity (X). When two goods are substitutes for each other, cross elasticity will be positive because a decrease in the price of one decreases the demand for the other.

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