If the cross price elasticity of demand between two goods is negative, then the two goods are
A) substitutes.
B) complements.
C) unrelated.
D) independent.

Question

Quizplus · Accepted Answer

When the cross price elasticity of demand between two goods is negative, it indicates that the two goods are complements. This means that a decrease in the price of one good will lead to an increase in the demand for the other good, and vice versa. Examples of complements include peanut butter and jelly, or cars and gasoline.

If the Cross Price Elasticity of Demand Between Two Goods