The cross-price elasticity of demand between milk and soft drinks is likely to be
A)negative because the goods are complements
B)positive because the goods are complements
C)negative because the goods are substitutes
D)positive because the goods are substitutes
E)0 because the goods are not usually consumed by the same person at one time

Question

Quizplus · Accepted Answer

The cross-price elasticity of demand is positive for substitutes because an increase in the price of one good leads to an increase in the demand for the other. Milk and soft drinks are likely substitutes, so the elasticity is positive.

The Cross-Price Elasticity of Demand Between Milk and Soft Drinks