Final answer:
(B) Elastic demand is the type of demand that shifts in response to price changes. When the demand for one good changes due to a price change in another good, especially in the case of substitutes, it is an example of elastic demand with positive cross-price elasticity.
Step-by-step explanation:
The demand that shifts when faced with price changes is known as elastic demand. In the context of cross-price elasticity of demand, this refers to how the demand for one good changes in response to a price change of another good.
If two goods are substitutes, such as plane tickets and train tickets, an increase in the price of one will lead to an increase in the demand for the other. This is because consumers will substitute the more expensive good with the cheaper one.
Therefore, substitute goods have a positive cross-price elasticity of demand. On the other hand, if two goods are complements, like bread and peanut butter, an increase in the price of one would decrease the demand for the other, which is indicated by a negative cross-price elasticity.