A negative cross elasticity of demand means that two goods are _____, while a negative income elasticity of demand means that a good is a(n) _____ good.
A) complements; normal
B) complements; inferior
C) substitutes; normal
D) substitutes; inferior

Question

Quizplus · Accepted Answer

A negative cross 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. A negative income elasticity of demand suggests that the good is an inferior good, meaning that its demand decreases as consumer income increases.

A Negative Cross Elasticity of Demand Means That Two Goods