If goods A and B are complements:
A)the own price elasticity may be superior.
B)a decrease in the price of B causes the demand for A to increase.
C)they are also substitutes.
D)an increase in the price of A causes the demand for B to increase.

Question

Quizplus · Accepted Answer

Complementary goods have a negative cross-price elasticity of demand, meaning that a decrease in the price of one (good B) will increase the demand for the other (good A). Therefore, the correct option is B. The own-price elasticity of demand for a complementary good may be low because an increase in the price of good A may reduce the demand for both goods A and B. Complementary goods are not substitutes, as they are often consumed together. Option D is incorrect because an increase in the price of A would generally reduce the demand for both goods A and B.

If Goods a and B Are Complements