PRC-3 · Chapter 11 · Question 21 of 57
If the Cross Price Elasticity between smartphones and mobile data plans is negative (-2.0), this implies that if mobile data plans become very expensive, the demand for smartphones will:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Decrease
Explanation
A negative cross elasticity signifies complementary goods. If data plans (the complement) become too expensive, people will buy fewer smartphones to use them with.
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