The cross elasticity of demand for butter and margarine is likely to be
A) positive because they are substitutes.
B) positive because they are complements.
C) negative because they are substitutes.
D) negative because they are complements.
E) positive because they are normal goods.

Question

Quizplus · Accepted Answer

Butter and margarine are considered substitutes, which means that as the price of one increases, the demand for the other increases as well. Therefore, the cross elasticity of demand between these two goods is likely to be positive.

The Cross Elasticity of Demand for Butter and Margarine Is