Two items which have a negative cross price elasticity of demand are referred to as
A) luxury goods.
B) inferior goods.
C) substitutes.
D) complements.

Question

Quizplus · Accepted Answer

Two items which have a negative cross price elasticity of demand are referred to as complements. This means that when the price of one item increases, the demand for the other item decreases. For example, if the price of coffee increases, the demand for creamer, a complement to coffee, may decrease as consumers may choose to drink less coffee without creamer.

Two Items Which Have a Negative Cross Price Elasticity of Demand