Robert must always have sugar in his coffee. For Robert, the cross price elasticity of demand for coffee and sugar is
A) equal to 0.
B) negative.
C) positive.
D) impossible to determine without more information.

Question

Quizplus · Accepted Answer

The cross price elasticity of demand between two goods measures how the quantity demanded of one good responds to a change in the price of another good. If two goods are complements, like coffee and sugar for Robert, the cross price elasticity of demand is negative. This is because if the price of sugar increases, Robert will likely buy less coffee since his enjoyment of coffee depends on having sugar in it.

Robert Must Always Have Sugar in His Coffee