Question

Compared to coffee, we would expect the cross elasticity of demand for: Group of answer choices tea to be positive, but negative for cream. tea to be negative, but positive for cream. both tea and cream to be negative. both tea and cream to be positive.

Answer 1

Tea to be negative, but positive for cream is the cross elasticity of demand as compared to the coffee.

What is cross elasticity demand?

When the price of one of the items varies, the cross elasticity of demand analyzes the link between the two. It illustrates how the relative shift in demand for one good changes as the cost of the other increases or decreases.

Thus, option B is correct.

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