The pair of items that is likely to have the LARGEST positive cross-price elasticity of demand is:
A)coffee and tea.
B)skis and ski boots.
C)pizza and pepperoni.
D)milk and cookies.

Question

Quizplus · Accepted Answer

Coffee and tea are substitute goods, meaning if the price of one increases, the demand for the other is likely to increase as well, indicating a positive cross-price elasticity of demand. Skis and ski boots, pizza and pepperoni, and milk and cookies are more likely to be complementary goods, where if the price of one increases, the demand for the other decreases, indicating a negative cross-price elasticity of demand.

The Pair of Items That Is Likely to Have the LARGEST