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Question:
When two goods are complements, the cross elasticity of demand is:
A
negative, and for substitutes the cross price elasticity of demand is positive.
explanation
The cross elasticity of demand for goods that are complements is negative because an increase in the price of one would tend to decrease the quantity demanded of the other. The cross elasticity of demand for substitute goods is positive because an increase in the price of one would tend to increase the quantity demanded of the other.
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