If the cross-price elasticity of demand of two goods is negative, we can conclude that the two goods are:
A) substitutes.
B) complements.
C) normal goods.
D) inferior goods.

Question

Quizplus · Accepted Answer

A negative cross-price elasticity of demand indicates that an increase in the price of one good leads to a decrease in the quantity demanded of the other good. This is a characteristic of complementary goods, as they are consumed together, and an increase in the price of one good reduces the demand for both goods.

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