If the cross-price-elasticity of goods X and Y is negative,then the sales of X move:
A) in the same direction as the price of Y,and X and Y are complementary goods.
B) in the opposite direction as the price of Y,and X and Y are complementary goods.
C) in the opposite direction as the price of Y,and X and Y are substitute goods.
D) in the same direction as the price of Y,and X and Y are substitute goods.

Question

Quizplus · Accepted Answer

A negative cross-price-elasticity means that as the price of good Y increases, the quantity demanded of good X decreases. This indicates that X and Y are complementary goods, as the two are typically consumed together in a complementary manner. Therefore, the sales of X move in the opposite direction as the price of Y.

If the Cross-Price-Elasticity of Goods X and Y Is Negative,then