Question

A positive cross-elasticity of demand for two products indicates that that they are:

substitutes

complements

independent goods

normal goods

Answer 1

There is a positive cross price elasticity this means that is the price of one good increases then the quantity demanded of other increases and this means the both goods are substitute such as Coca Cola and Pepsi

Therefore (a) is the answer

For complementary goods ,cross price elasticity is negative and for normal goods it has nothing to do with cross price elasticity but income elasticity is positive. Independent goods have no role of cross price elasticity and therefore

(b,c,d) are wrong