The sign of the cross-price elasticity of demand:
A) indicates whether two goods are complements or substitutes.
B) indicates whether a good is normal or inferior.
C) is always positive.
D) is always negative, but the sign is customarily dropped for convenience.

Question

Quizplus · Accepted Answer

The sign of the cross-price elasticity of demand indicates whether two goods are complements (negative sign) or substitutes (positive sign).

The Sign of the Cross-Price Elasticity of Demand