Asked by
Harrison Macdonald
on Oct 26, 2024
Verified
If two goods are complementary,we can assume that the cross-price elasticity of demand for these goods is:
A) greater than 1 .
B) equal to 0.
C) less than 0.
D) impossible to determine without more information.
Complementary Goods
Products or services that are used together, thereby the demand for one is increased when the price of the other is decreased, exemplifying a direct relationship between price and demand of different goods.
Cross-Price Elasticity
A measure of how the quantity demanded of one good responds to a change in price of another good, indicating substitutability or complementarity between products.
- Digest the concept of cross-price elasticity of demand and its application in figuring out the relationship between two products (substitutes or complements).
- Clarify the distinction between substitute and complementary items by examining cross-price elasticity of demand statistics.
Verified Answer
AM
Learning Objectives
- Digest the concept of cross-price elasticity of demand and its application in figuring out the relationship between two products (substitutes or complements).
- Clarify the distinction between substitute and complementary items by examining cross-price elasticity of demand statistics.