If the cross elasticity of demand between car insurance and new cars is -0.41,then car insurance and new cars are
A) complements.
B) substitutes.
C) normal goods.
D) inferior goods.
E) unrelated goods.

Question

Quizplus · Accepted Answer

The negative cross elasticity of demand indicates that as the price of new cars increases, the demand for car insurance decreases, which is characteristic of complementary goods.

If the Cross Elasticity of Demand Between Car Insurance and New