The cross-elasticity of demand between complementary goods is?

a

unitary

b

positive

c

zero

d

negative

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Correct Option
d

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Discussions (5)

Barscoranking
7 years ago

Cross elasticity of demand for all complementary goods is always negative while for subtitude goods is always positive so the answer is negative

Vansilva
6 years ago

Complementary goods have a negative cross- price elasticity: as the price of one good increases, the demand for the second good decreases. Substitute goods have a positive cross-price elasticity: as the price of one good increases, the demand for the other good increases.

Emmanuel2004
3 years ago

it can't be positive laaa, anything that is related positively in demand means that an increase in price will lead to an increase in demand and vice versa(substitute demand) while for negative relationship an increase in price will lead to a decrease in demand(complementary goods)
so for complementary goods an increase in price of a commodity will lead to a corresponding decrease in demand for another and vice versa.

Makfod
3 years ago

Complementary goods are goods one use together like tea and sugar, if the price of one increases the demand for the other will fall. Unlike substitute goods like Airtel and mtn simcards, when the price of one increases, the demand for the other will increase because people will shift to buying the other one. So complementary goods have negative price elasticity while substitutes have POSITIVE elasticity

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