When two goods are complements to each other,the cross-price elasticity will
A) begin by being positive but becomes negative over time.
B) be unaffected by goods being complements.
C) be zero.
D) be positive.
E) be negative.

Question

Quizplus · Accepted Answer

When two goods are complements, they have a negative cross-price elasticity, as the price of one good affects the demand for the other in the opposite direction. For example, if the price of coffee increases, the demand for creamer (which is a complement to coffee) will decrease. Therefore, the answer is E.

When Two Goods Are Complements to Each Other,the Cross-Price Elasticity