The market demand function for item X is a function of its price, household income, and the price of item Y.
| Own-price elasticity of demand for X | -0.8 |
| Income elasticity of demand for X | 1.5 |
| Cross-price elasticity of demand for X with respect to the price of Y | 0.4 |
Given the above elasticity coefficients for the two items, which of the following statements is most accurate?
A is correct. The cross-price elasticity is positive, indicating that as the price of Y increases, more of X is demanded, making X and Y substitutes.