A negative cross elasticity of demand indicates that two commodities are
A) luxuries.
B) necessities.
C) unrelated.
D) substitutes.
E) complements.

Question

Quizplus · Accepted Answer

A negative cross elasticity of demand indicates that the two commodities are complements. This means that an increase in the price of one leads to a decrease in the demand for the other, as they are often used together.

A Negative Cross Elasticity of Demand Indicates That Two Commodities