Question

A study shows that the coefficient of the cross price elasticity of Coke and Sprite is positive. This information indicates that Coke and Sprite are:


a. Inferior goods


b. Substitute goods


c. Complementary goods


d. Independent goods

Answer 1

C is right answer

complimentary goods

Complementary goods is define as those goods which are demanded jointly; if price of good goes up, demand for related good will decline (lettuce price increases, dressing demand decreases); price of good goes down, demand for related good goes up (price of tuition goes down, demand for textbook goes up)