For which pairs of goods is the cross-price elasticity most likely to be positive?
A)Peanut butter and jelly
B)Bicycle frames and bicycle tires
C)Pens and pencils
D)Digital college textbooks and iPhones

Question

Quizplus · Accepted Answer

Pens and pencils are substitute goods, meaning that an increase in the price of one is likely to lead to an increase in the demand for the other, resulting in a positive cross-price elasticity.

For Which Pairs of Goods Is the Cross-Price Elasticity Most