Which pair of goods is most likely to have a negative cross-price elasticity?
A) All cross-price elasticities are negative, but often reported in absolute value.
B) Peanut butter and jelly.
C) Butter and margarine.
D) Milk and pencils.

Question

Quizplus · Accepted Answer

Peanut butter and jelly are substitutes, so a decrease in the price of peanut butter will lead to an increase in the demand for jelly, and vice versa.

Which Pair of Goods Is Most Likely to Have a Negative