For two goods that are complements, the cross-price elasticity of demand for one good with the other will lie between _____.
A) 0 and 0.5
B) -0.5 and +0.5
C) 0 and -∞
D) 1 and ∞

Question

Quizplus · Accepted Answer

For two goods that are complements, the cross-price elasticity of demand is negative, indicating that as the price of one good increases, the demand for the complementary good decreases. This value can range from 0 (perfectly inelastic) to negative infinity (perfectly elastic), hence the correct range is 0 to -∞.

For Two Goods That Are Complements, the Cross-Price Elasticity of Demand