If a lower price for good X increases the demand for good Y, the cross elasticity value for the two goods is
A) positive and greater than one.
B) positive and less than one.
C) negative.
D) equal to zero.
E) possibly negative, positive or zero, but there is not enough information to decide.

Question

Quizplus · Accepted Answer

If a lower price for good X increases the demand for good Y, the two goods are likely complements, which means the cross elasticity of demand is negative.

If a Lower Price for Good X Increases the Demand