Coke and Pepsi, both cola producers, likely have a _____ cross-price elasticity of demand than that of Coke and bananas.
A) less elastic
B) smaller
C) more negative
D) more elastic

Question

Quizplus · Accepted Answer

Coke and Pepsi are very similar products and are likely substitutes for each other, therefore they would have a higher cross-price elasticity of demand. On the other hand, Coke and bananas are not substitutes for each other, therefore they would have a lower cross-price elasticity of demand. Thus, D is the correct choice.

Coke and Pepsi, Both Cola Producers, Likely Have a _____