In the case of perfect substitutes, the cross elasticity of demand will be equal to positive infinity. Substitutes: Two goods that are substitutes have a positive cross elasticity of demand: as the price of good Y rises, the demand for good X rises. Two goods may also be independent of each other.

Cross elasticity of demand measures how responsive the demand for a product is to changes in the price of another product. When two products are perfect substitutes for each other, their cross elasticity of demand is said to be infinite.

Explanation:

Perfect substitutes are two goods that can be used for the same purpose and are interchangeable. For example, if a consumer wants to buy a pen, they can choose between two brands that have the same quality, features, and price. In this case, the two brands are perfect substitutes for each other.

The cross elasticity of demand between two perfect substitutes is infinite because consumers will switch from one brand to another as soon as there is a price difference. This means that the demand for one product will increase or decrease by an unlimited amount in response to a change in the price of the other product.

For example, if the price of brand A increases, consumers will switch to brand B, and the demand for brand A will decrease to zero. Similarly, if the price of brand B increases, consumers will switch to brand A, and the demand for brand B will decrease to zero.

Therefore, the cross elasticity of demand between perfect substitutes is positive infinity.

As there is perfect substitute available in the market. slite change in our price will shift customers towards another product which is our perfect substitute so price elasticity is infinite