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The cross-elasticity of demand is _________ for substitutes and ___________ for complements. A. the same, negative...

The cross-elasticity of demand is _________ for substitutes and ___________ for complements.

  • A. the same, negative
  • B. positive, the same
  • C. positive, negative
  • D. negative, positive
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Answer #1

ANSWER:

The correct answer is option c that is positive , negative as for substitutes if price of one good increases , the demand for other good also increases and hence the cross price elasticity for substitutes is positive while for complements it is negative as price of one good increases , the demand for 2nd good decreases.

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