If the cross elasticity of demand is negative,that means the goods
A) have elastic demands.
B) have inelastic demands.
C) are complements.
D) are substitutes.
E) are inferior.

Question

Quizplus · Accepted Answer

If the cross elasticity of demand is negative, it means that an increase in the price of one good leads to a decrease in the quantity demanded of the other good. This indicates that the two goods are complements, meaning they are used together or are considered as alternatives to each other. For example, if the price of hot dogs increases, consumers may buy fewer hot dog buns, which have a negative cross elasticity of demand with hot dogs. Therefore, choice C is the correct option.

If the Cross Elasticity of Demand Is Negative,that Means the Goods