The negative effect of cross-price elasticity in which the increasing price of one service decreases the demand for another service is said to be:
A)unitary.
B)substitutes.
C)complementary.
D)inelastic.
E)elastic.

Question

Quizplus · Accepted Answer

Cross-price elasticity of demand for complementary goods is negative because as the price of one good increases, the demand for the complementary good decreases. This is because the goods are used together, so an increase in the price of one makes the other less attractive as well, reducing its demand.

The Negative Effect of Cross-Price Elasticity in Which the Increasing