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- Subject
- Supply and Demandeconomics-mcqs › supply-and-demand
- Published
- 29 May 2019
- Last updated
- 28 May 2026
What does a cross elasticity of demand value of -2 indicate about the relationship between two products?
Multiple choice question for Supply and Demand. Select an option, then review the explanation below.
Explanation
A negative cross elasticity of demand signifies that the products are complements. Since the absolute value is greater than 1 (|-2|=2), the demand is considered cross-price elastic, meaning quantity demanded is highly responsive to price changes in the related good.
More Supply and Demand MCQs
Practice related questions from the same subject.
- 1.What is the typical shape of a demand curve?
- 2.What term describes a company earning profits beyond its normal profit level?
- 3.How does an increase in marginal cost affect output, and how does an increase in marginal revenue impact output?
- 4.Marginal revenue refers to the ________ resulting from producing an additional ________ of output.
- 5.What are firms generally assumed to do with their costs and profits?