Final answer:
Goods with a positive cross elasticity of demand are substitute goods, meaning that as the price of one increases, the consumption of its substitute will also increase. This concept reveals the interdependent nature of product demand in the marketplace, particularly between competing items.
Step-by-step explanation:
Goods that would have a positive cross elasticity of demand are those that act as substitutes for one another. For example, if good A is a substitute for good B, like coffee and tea, then a higher price for B will result in an increased quantity consumed of A. This concept highlights the relationship between the price of one good and the demand for another good.When we refer to cross-price elasticity of demand, we are looking at the percentage change in the quantity of good A demanded as a result of a percentage change in the price of good B. The formula for cross-price elasticity of demand indicates this relationship. This provides a quantifiable measure of how much the demand for one product is affected by changing prices of another product.In conclusion, goods with a positive cross elasticity of demand typically indicate a substitute relationship where consumers are willing to switch from one product to another as prices change, maintaining their satisfaction level while being cost-efficient.