ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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They are substitutes
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They are complements
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They are inferior goods
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They are not related
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Detailed explanation-1: -This means that goods A and B are good substitutes.
Detailed explanation-2: -If two goods are complements, an increase in the price of one will lead to a reduction in the demand for the other – the cross price elasticity of demand is negative.
Detailed explanation-3: -The ratio of the percentage change in quantity demanded of one good to the percentage change in the price of some other good. a positive coefficient indicates the two products are substitute goods; a negative coefficient indicates they are complementary goods.
Detailed explanation-4: -In economics, a complementary good or complement is a good with a negative cross elasticity of demand, in contrast to a substitute good. This means a good’s demand is increased when the price of another good is decreased. Conversely, the demand for a good is decreased when the price of another good is increased.
Detailed explanation-5: -Whereas, if the cross-price elasticity of demand is a negative value, the two goods or services would be complementary goods or services.