The cross-price elasticity of demand for peanut butter and jelly is likely:
A)a negative number.
B)a positive number.
C)a very high positive number.
D)1.

Question

Quizplus · Accepted Answer

The cross-price elasticity of demand measures the responsiveness of the quantity demanded of one good in response to a change in the price of another good. Peanut butter and jelly are considered complementary goods, meaning that they are often consumed together. When the price of one (e.g. jelly) increases, the demand for the other (e.g. peanut butter) is likely to decrease. Therefore, the cross-price elasticity of demand for peanut butter and jelly is a negative number.

The Cross-Price Elasticity of Demand for Peanut Butter and Jelly