If the cross elasticity of demand between two goods is

Question

If the cross elasticity of demand between two goods is - 0.56, then a fall in the price of one good leads to a _______ shift in the _______ the other good.
A) rightward; supply curve of
B) leftward; demand curve for
C) leftward; supply curve of
D) rightward; demand curve for

Quizplus · Accepted Answer

A negative cross elasticity of demand indicates that the two goods are complements. Therefore, a fall in the price of one good increases the demand for the other good, leading to a rightward shift in the demand curve for the other good.