Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?
A) tea and coffee
B) soda and water
C) spaghetti and ravioli
D) tennis shoes and flip-flops
E) coffee and cream

Question

Quizplus · Accepted Answer

Negative cross-price elasticity of demand occurs when the price increase of one good leads to an increase in the demand for another good, indicating that the two goods are complements. Coffee and cream are complements because when the price of coffee increases, people might still buy it and, consequently, also buy cream to go with it, or vice versa.

Which One of the Following Pairs of Goods Is Likely