Asked by Cristina Rodriguez on Jul 28, 2024
Verified
If the cross-price elasticity of demand between rice and beans is -0.25,rice and beans are complements.
Rice and Beans
A staple food dish in many cultures around the world, consisting of rice and beans as the main ingredients.
Cross-Price Elasticity of Demand
The sensitivity measure of one good's demanded quantity to the price changes of a separate good.
Complements
Goods or services that are typically consumed together, where the increase in the price of one leads to a decrease in demand for the other.
- Identify the impact of substitute and complementary goods on demand levels.
- Understand cross-price elasticity of demand and its implications for goods being substitutes or complements.
Verified Answer
GK
Geoff KoechAug 02, 2024
Final Answer :
True
Explanation :
A negative cross-price elasticity of demand indicates that as the price of one good increases, the demand for the other good decreases, which is characteristic of complementary goods.
Learning Objectives
- Identify the impact of substitute and complementary goods on demand levels.
- Understand cross-price elasticity of demand and its implications for goods being substitutes or complements.