If milk and cookies are complements, then their cross price elasticity of demand will be
A) elastic.
B) greater than zero but less than 1.
C) negative.
D) positive.

Question

Quizplus · Accepted Answer

Complementary goods have a negative cross price elasticity of demand because as the price of one good increases, the demand for the other good decreases. Therefore, the correct answer is C) negative.

If Milk and Cookies Are Complements, Then Their Cross Price