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Question : If two commodities are complements, then their cross-price elasticity is

Option 1: zero

Option 2: positive

Option 3: negative

Option 4: imaginary number


Team Careers360 20th Jan, 2024
Answer (1)
Team Careers360 25th Jan, 2024

Correct Answer: negative


Solution : The correct answer is negative .

Cross-price elasticity is negative when two goods are complementary. This means when the price of one commodity rises, so will the demand for the other. This is because complements are commodities that are consumed together.

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