Distinguish fromelasticity of goods substitution cross elasticity of demand
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➡️ Complements: Two goods that complement each other have a negative cross elasticity of demand: as the price of good Y rises, the demand for good X falls. Substitutes: Two goods that are substitutes have a positive cross elasticity of demand: as the price of good Y rises, the demand for good X rises.
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The cross elasticity of demand for substitute goods is always positive because the demand for one good increases when the price for the substitute good increases.
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