If the cross elasticity of demand between two goods X and Y is negative, the two goods are
Asubstitutes
Binferior goods
CcomplementsCORRECT
Dindependent goods
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Toaster Teacher
Why the answer is C, and why the others tempt you.
Cross elasticity of demand measures the responsiveness of demand for one good to a change in the price of another. A negative cross elasticity indicates that when the price of Y rises, demand for X falls, which is the characteristic of complementary goods (goods used together). Substitutes have positive cross elasticity, while independent goods have zero cross elasticity.
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