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What does an elasticity of .606 say about the cross-price elasticity of coffee and milk?

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User Geocoin
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Final answer:

An elasticity of .606 indicates that coffee and milk are substitute goods, meaning an increase in the price of one will lead to an increase in the quantity demanded of the other.

Step-by-step explanation:

The cross-price elasticity of .606 indicates that coffee and milk are substitute goods. A positive cross-price elasticity means that an increase in the price of one good will lead to an increase in the quantity demanded of the other good. In this case, when the price of milk increases, the quantity demanded for coffee will also increase.

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User Wandos
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