During the 1970s,OPEC's output restrictions caused gasoline prices to increase sharply.Coincidentally,demand for gas-guzzling cars fell.A likely explanation for these observations is that gasoline and cars had a ________ elasticity of demand that was ________.
A)cross; negative
B)cross; positive
C)income; negative
D)income; positive
E)price; negative

Question

Quizplus · Accepted Answer

Gasoline and cars are complementary goods, meaning that an increase in the price of gasoline would lead to a decrease in the demand for gas-guzzling cars. This relationship is characterized by a negative cross elasticity of demand.

During the 1970s,OPEC's Output Restrictions Caused Gasoline Prices to Increase