If the cross-elasticity of demand for two goods is negative, this means that:
A) only the poor will buy the goods.
B) they are normal goods.
C) the goods are substitutes.
D) the goods are complements.

Question

Quizplus · Accepted Answer

A negative cross-elasticity of demand means that the two goods are complements, which implies that the demand for one good increases when the price of the other good decreases.

If the Cross-Elasticity of Demand for Two Goods Is Negative