Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?
A) chocolate ice cream and sprinkles
B) ice cream shakes and hamburgers
C) fries and ketchup
D) Pepsi and Coke
E) onion rings and chicken strips

Question

Quizplus · Accepted Answer

Positive cross-price elasticity of demand indicates that the goods are substitutes. Pepsi and Coke are classic examples of substitute goods, meaning if the price of one increases, the demand for the other is likely to increase as well.

Which One of the Following Pairs of Goods Is Likely