If two goods both had negative cross elasticities and negative income elasticities,
A)they are both normal and substitutes for one another.
B)they are both normal and complements for one another.
C)they are both inferior and substitutes for one another.
D)they are both inferior and complements for one another.

Question

If two goods both had negative cross elasticities and negative income elasticities,
A)​they are both normal and substitutes for one another.
B)​they are both normal and complements for one another.
C)​they are both inferior and substitutes for one another.
D)​they are both inferior and complements for one another.

Quizplus · Accepted Answer

Negative cross elasticities indicate that the goods are complements, meaning that an increase in the price of one good leads to a decrease in the demand for the other. Negative income elasticities suggest that the goods are inferior, meaning that an increase in income leads to a decrease in the demand for these goods. Therefore, the correct answer is that they are both inferior and complements for one another.

If Two Goods Both Had Negative Cross Elasticities and Negative