The cross-price elasticity between a pair of complementary goods will be
A) positive.
B) negative.
C) zero.
D) positive or zero depending upon the strength of the relationship.

Question

Quizplus · Accepted Answer

Complementary goods are goods which are used together. A change in price of one good will have an opposite effect on the demand for the other good. As the price of one good increases, the demand for the other good decreases, and as the price of one good decreases, the demand for the other good increases. This means that the cross-price elasticity between a pair of complementary goods will be negative.

The Cross-Price Elasticity Between a Pair of Complementary Goods Will