If the cross price elasticity of demand equals -1,then the two goods are
A) both normal.
B) both inferior.
C) complements to one another.
D) substitutes to one another.

Question

Quizplus · Accepted Answer

When the cross price elasticity of demand is equal to -1, the two goods are complements to each other. This means that an increase in the price of one good will lead to a proportionate decrease in the demand for the other good, and vice versa. In other words, the goods are consumed together, and the demand for one good is affected by the price of the other.

If the Cross Price Elasticity of Demand Equals -1,then the Two