ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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When the price of one good increases, the demand for the other decreases
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When the price of one good increases, the price of the other increases
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When the demand of one good increases, the price of the other decreases
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When the supply of one good increases, the demand of that good increases
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Detailed explanation-1: -Complementary goods exhibit a negative cross elasticity of demand: as the price of goods Y rises, the demand for good X falls.
Detailed explanation-2: -Complementary Goods and Cross Elasticity of Demand Complementary goods will have a negative cross elasticity of demand. If the price of one good increases, demand for both complementary goods will fall.
Detailed explanation-3: -Demand for a complementary good decreases when the price of the commodity rises. Demand curve will shift to the left. Was this answer helpful?
Detailed explanation-4: -Demand for a complementary good decreases when the price of the commodity rises.
Detailed explanation-5: -There lies an inverse relationship between the price of one complementary good and the demand for another complementary good, since the complementary goods are required to be consumed together. Thus, with the rise in price of one commodity, which is a complementary good, the demand for the other decreases.