Answer to Question #172652 in Microeconomics for atl

Question

Suppose the cross elasticity of demand for products A

 and B

 is +3.6 and for products C

 and D

 is −5.4.

 What can you conclude about how products A

 and B

 are related? Products C

 and D?

Answer 1

We can conclude that products A and B are substitutes, because Ecp > 0, and products C and D are complements, because Ecp < 0.