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If the cross-price elasticity of two goods is negative, then the two goods are:

• necessities.

• complements.

• normal goods.

• inferior goods.

If the cross-price elasticity of two goods is positive, then the two goods are:

• substitutes.

• complements.

• normal goods.

• inferior goods.

If two goods are substitutes, their cross-price elasticity will be:

• positive.

• negative.

• zero.

• equal to the difference between the income elasticities of demand for the two goods.

If two goods are complements, their cross-price elasticity will be:

• positive.

• negative.

• zero.

Suppose goods A and B are substitutes for each other. What would we expect the cross-price elasticity between these two goods to be?

• positive

• negative

• either positive or negative. It depends whether A and B are normal goods or inferior goods.

• either positive or negative. It depends whether the current price level is on the elastic or inelastic portion of the demand curve.

Which of the following could be the cross-price elasticity of demand for two goods that are complements?

• -1.3

• 0

• 0.2

• 1.4

For which pairs of goods is the cross-price elasticity most likely to be positive?

• peanut butter and jelly

• bicycle frames and bicycle tires

• pens and pencils

• college textbooks and iPods

For which pairs of goods is the cross-price elasticity most likely to be negative?

• peanut butter and jelly

• automobile tires and coffee

• pens and pencils

• paperback novels and electronic books for e-readers

If the cross-price elasticity of demand for two goods is 1.25, then:

• the two goods are luxuries.

• the two goods are substitutes.

• one of the goods is normal and the other good is inferior.

• the demand for one of the goods conforms to the law of demand, but the demand for the other good violates the law of demand.

If the cross-price elasticity of demand for two goods is -4.5, then:

• the two goods are substitutes.

• the two goods are complements.

• one of the goods is normal while the other good is inferior.

• one of the goods is a luxury while the other good is a necessity.