For the following pairs of goods, would you expect the cross-price elasticity of demand to be positive, negative, or

Question

For the following pairs of goods, would you expect the cross-price elasticity of demand to be positive, negative, or zero? Briefly explain. A. electricity and air conditioners B. solar power and coal power C. airplane tickets and train tickets D. paper clips and bicycles E. cell phones data plans and smartphones

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For the following pairs of goods, would you expect the cross-price elasticity of demand to be positive, negative, or zero? Briefly explain. A. electricity and air conditioners Negative because these goods are complementary goods that are used together. B. solar power and coal power Positive because these are substitute goods. C. airplane tickets and train tickets Positive, because these are substitute goods. D. paper clips and bicycles Zero, because these goods are not related. E. cell phones data plans and smartphones Negative because these are complimentary goods that are used together.

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For the following pairs of goods, would you expect the cross-price elasticity of demand to be positive, negative, or zero? Briefly explain

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Archived Solution

A. electricity and air conditioners	Negative because these goods are complementary goods that are used together.
B. solar power and coal power	Positive because these are substitute goods.
C. airplane tickets and train tickets	Positive, because these are substitute goods.
D. paper clips and bicycles	Zero, because these goods are not related.
E. cell phones data plans and smartphones	Negative because these are complimentary goods that are used together.