Which of the following pairs of goods is most likely to have a positive cross-price elasticity?
A) Printers and ink cartridges
B) A privately-owned car and public transportation
C) Coffee and sugar
D) Motorcycles and typewriters

Question

Quizplus · Accepted Answer

A positive cross-price elasticity of demand indicates that the goods are substitutes, meaning if the price of one good increases, the demand for the other good also increases. A privately-owned car and public transportation are substitutes because if the price (or cost) of using a privately-owned car increases, people are more likely to use public transportation instead, and vice versa.

Which of the Following Pairs of Goods Is Most Likely