Suppose that the cross price elasticity of demand between good X and good Y is -1.55. This indicates that the two goods are
A) substitutes.
B) complements.
C) both inferior.
D) completely unrelated in the minds of consumers.

Question

Quizplus · Accepted Answer

The negative cross price elasticity of demand indicates that as the price of one good increases, the demand for the other good decreases, which is characteristic of complementary goods.

Suppose That the Cross Price Elasticity of Demand Between Good