If the cross-price elasticity of demand for two goods is -4.5,then
A)the two goods are substitutes.
B)the two goods are complements.
C)one of the goods is normal while the other good is inferior.
D)one of the goods is a luxury while the other good is a necessity.

Question

Quizplus · Accepted Answer

A negative cross-price elasticity of demand indicates that the two goods are complements, meaning that an increase in the price of one good leads to a decrease in the demand for the other good.

If the Cross-Price Elasticity of Demand for Two Goods Is