The cross elasticity of demand for strawberry jelly and grape jelly 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) negative because they are inferior goods.

Question

Quizplus · Accepted Answer

Strawberry and grape jellies are both fruit preserves and are likely to be substitutes for each other. Hence, if the price of one jelly rises, the demand for other jelly is likely to increase, resulting in a positive cross elasticity of demand.

The Cross Elasticity of Demand for Strawberry Jelly and Grape