ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The cross elasticity of demand for substitute goods is always positive because the demand for one good increases when the price for the substitute good increases. Alternatively, the cross elasticity of demand for complementary goods is negative.

Detailed explanation-2: -We determine whether goods are complements or substitutes based on cross price elasticity-if the cross price elasticity is positive the goods are substitutes, and if the cross price elasticity are negative the goods are complements.

Detailed explanation-3: -The answer is C. Negative cross-price elasticity implies that the goods are complements; thus, if the quantity demanded of bananas fell, the demand for peanuts would also be lower. 10.

Detailed explanation-4: -A negative cross elasticity denotes two products that are complements, while a positive cross elasticity denotes two products are substitutes.

Detailed explanation-5: -This means that an increase in price leads to a fall in quantity demanded or the demand curve is downward sloping.