PRC-3 · Chapter 11 · Question 5 of 57
When the price of cinema tickets rises by 10%, the demand for streaming service subscriptions rises by 15%. This results in a positive Cross Elasticity of Demand (+1.5). What is the economic relationship between these two services?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) They are substitute goods
Explanation
A positive cross price elasticity of demand means that as the price of one good rises, consumers switch to the other, making them substitutes.
More Elasticity of Demand and Supply MCQs
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