Final answer:
Good A is a complement to good B, as indicated by the negative cross elasticity of demand of -0.87. This value means that an increase in the price of good B results in a decrease in the demand for good A, which is typical of complementary goods.
Step-by-step explanation:
If the cross elasticity of demand for good A with respect to good B is -0.87, this indicates that good A and good B are complements to each other. This is because the cross elasticity of demand measures the percentage change in the quantity demanded of good A resulting from a percentage change in the price of good B. Since the elasticity is negative, it suggests that an increase in the price of good B leads to a decrease in the quantity demanded of good A; hence, when good B is more expensive, consumers buy less of good A.
A negative cross elasticity of demand is characteristic of complementary goods. Therefore, good A is a complement to good B. This is due to the fact that consumers tend to use these goods together, for example coffee (good A) and sugar (good B). If the price of sugar increases, the demand for coffee is likely to decrease because these goods are used together. In contrast, substitute goods have positive cross-price elasticities of demand, indicating that they can replace each other in consumption.
Given the negative elasticity of -0.87, we can conclude that good A is a complement to good B, not a substitute nor does the negative value suggest whether good A is an inferior or normal good as those terms refer to a different type of elasticity (income elasticity).