Practice question · Sort into groups

Sort by cross-price elasticity sign.

Groups: Substitutes ( $\varepsilon_{xy} > 0$ ) · Complements ( $\varepsilon_{xy} < 0$ )

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Substitutes ( $\varepsilon_{xy} > 0$ ): Butter and margarine, Tea and coffee, Bus tickets and train tickets

Complements ( $\varepsilon_{xy} < 0$ ): Cars and petrol, Printers and ink cartridges, Tennis rackets and tennis balls

Why

Substitutes: price of one rises, demand for the other rises (positive). Complements: price of one rises, demand for the other falls (negative).

Practise Demand and Elasticity

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