If the cross-price elasticity of two goods is negative,then those two goods are
A) necessities.
B) complements.
C) normal goods.
D) inferior goods.

Question

Quizplus · Accepted Answer

A negative cross-price elasticity indicates that an increase in the price of one good leads to a decrease in the demand for the other good. This is characteristic of complementary goods, which are typically consumed together. For example, if the price of hot dogs increases, the demand for hot dog buns will likely decrease, since people tend to consume the two goods together. Necessities and normal goods would have positive cross-price elasticities, and inferior goods would have zero or positive cross-price elasticities.

If the Cross-Price Elasticity of Two Goods Is Negative,then Those