Which of the following pairs of goods would most likely exhibit a cross price elasticity of 2.2?
A)hamburgers and fries
B)peanut butter and jelly
C)butter and margarine
D)tennis balls and tennis rackets

Question

Which of the following pairs of goods would most likely exhibit a cross price elasticity of 2.2?
A)​hamburgers and fries
B)​peanut butter and jelly
C)​butter and margarine
D)​tennis balls and tennis rackets

Quizplus · Accepted Answer

Butter and margarine are close substitutes for each other. A cross price elasticity of 2.2 indicates a strong positive relationship, meaning if the price of one good increases, the demand for the other good increases significantly, which is typical for substitute goods.

Which of the Following Pairs of Goods Would Most Likely