If the cross-price elasticity of demand between two goods is negative, then the two goods are ?
Correct answer: D. Complements
- A. normal goods
- B. unrelated goods
- C. Substitutes.
- D. Complements
Explanation
A negative cross-price elasticity means that when the price of one good rises, demand for the other falls, indicating complementary goods. Substitutes have positive cross-price elasticity because buyers switch toward the other good.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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