On some days Gus makes his own salad for lunch, preferring to use either iceberg or romaine lettuce, topped off with lots of fresh tomatoes. The cross-price elasticity of demand for iceberg lettuce with respect to romaine lettuce is _____, and the cross-price elasticity of demand for iceberg lettuce with respect to tomatoes is _____.
A) positive; negative
B) negative; positive
C) zero; positive
D) negative; zero

Question

Quizplus · Accepted Answer

Iceberg and romaine lettuce are substitutes, so the cross-price elasticity of demand between them is positive. Tomatoes are complements to lettuce in a salad, so the cross-price elasticity of demand between iceberg lettuce and tomatoes is negative.

On Some Days Gus Makes His Own Salad for Lunch