Question

    If the cross-price elasticity of demand between two

    goods is negative, the goods are:
    A Normal goods Correct Answer Incorrect Answer
    B Inferior goods Correct Answer Incorrect Answer
    C Substitutes Correct Answer Incorrect Answer
    D Complements Correct Answer Incorrect Answer

    Solution

    A negative cross-price elasticity indicates that as the price of one good rises, the demand for the other falls, which happens when goods are complements (e.g., coffee and sugar).

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