When the cross elasticity of demand between two goods is positive, the goods are substitutes.
An economic concept known as the cross elasticity of demand quantifies how responsively consumers purchase more of one commodity when the price of another good increases. By dividing the percentage change in the amount requested of one commodity by the percentage change in the price of the other good, this measurement is calculated.
An economic concept known as the cross elasticity of demand quantifies how responsively consumers purchase more of one commodity when the price of another good increases. Because demand for one good rises when the price for the substitute good rises, the cross elasticity of demand for substitute goods is always positive.
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