The cross-price elasticity of demand for coffee and tea is likely to be
A)greater than zero.
B)less than zero.
C)zero.
D)infinity.

Question

Quizplus · Accepted Answer

Coffee and tea are substitutes for each other, meaning that when the price of one good increases, the demand for the other good increases as customers switch from one to the other. Therefore, the cross-price elasticity of demand for coffee and tea is likely to be positive, or greater than zero.

The Cross-Price Elasticity of Demand for Coffee and Tea Is