A negative cross-price elasticity indicates that the two goods are substitutes.

### Why this is right A negative cross-price elasticity indicates complements, not substitutes. When the price of one good rises, demand for a complementary good tends to fall. ### The concept Cross-price elasticity measures how demand for one good responds to a price change in another. A positive value indicates substitutes: a higher price for one can increase demand for the alternative. A negative value indicates complements, which are used together. ### The other options - **True**: a negative sign is tempting to interpret as “opposite goods,” but the relevant relationship is complements. Substitutes have positive cross-price elasticity. ### Terms - **Cross-price elasticity**: responsiveness of demand for one good to a change in another good’s price. ### Remember Positive cross-price response suggests substitutes; negative response suggests complements.