We would expect the cross elasticity of demand between dress shirts and ties to be
A)positive, indicating normal goods.
B)positive, indicating complementary goods.
C)negative, indicating substitute goods.
D)negative, indicating complementary goods.

Question

Quizplus · Accepted Answer

Cross elasticity of demand between complementary goods is negative because as the price of one good increases, the demand for its complement decreases, indicating they are used together.

We Would Expect the Cross Elasticity of Demand Between Dress