Two goods are complementary if:
A) they are part of the basic food group.
B) each performs the same basic task.
C) the cross elasticity of demand is positive.
D) they are used together.
E) the income elasticity of demand is negative.

Question

Quizplus · Accepted Answer

Two goods are complementary if they are used together. For example, peanut butter and jelly or cars and gasoline. When the price of one good increases, the demand for the other good decreases because they are typically used together. This is shown by a negative cross elasticity of demand.

Two Goods Are Complementary If