When two goods have negative cross elasticities of demand and positive income elasticities, they are:
A)Normal and substitutes.
B)Normal and complements.
C)Inferior and substitutes.
D)Inferior and complements.

Question

When two goods have negative cross elasticities of demand and positive income elasticities, they are:
A)​Normal and substitutes.
B)​Normal and complements.
C)​Inferior and substitutes.
D)​Inferior and complements.

Quizplus · Accepted Answer

Negative cross elasticity indicates that the goods are complements, while positive income elasticity indicates that they are normal goods.

When Two Goods Have Negative Cross Elasticities of Demand and Positive