If an increase in the price of Pepsi prompts some consumers to buy close substitutes,the demand for Pepsi is _____
A)relatively price elastic.
B)relatively income elastic.
C)relatively price inelastic.
D)unit elastic.
E)perfectly elastic.

Question

Quizplus · Accepted Answer

If an increase in price leads consumers to shift to close substitutes, then demand is relatively price elastic, meaning that consumers are sensitive to changes in price. This is because they have other options that they can switch to if the price of Pepsi becomes too high.

If an Increase in the Price of Pepsi Prompts Some