Consider the following pair of goods:

  1. Tea and coffee
  2. Tea and sugar
  3. Printers and ink cartridges

Which of the above has/have negative cross elasticity of demand?

Answer: [B] 2 and 3 Only

Negative cross elasticity demand means that the increase in price of one good, decreases the demand of of other and vice versa.These are generally called complematary goods.For example increase in price of sugar may decrease the demand of tea.Tea and coffee are substitute goods;increase in price of coffee may increase the demand of tea.

This question is a part of GKToday's Integrated IAS General Studies Module