The cross price elasticity for Coke for a change in the price of Pepsi is likely to be
A)Negative and more negative than -1
B)Negative but less negative than -1
C)Zero
D)Positive

Question

Quizplus · Accepted Answer

The cross price elasticity for Coke for a change in the price of Pepsi is likely to be positive because Coke and Pepsi are substitute goods. When the price of Pepsi increases, consumers are likely to buy more Coke, leading to a positive cross price elasticity.

The Cross Price Elasticity for Coke for a Change in the Price