In order to prove that Coca-Cola and 7UP are substitutes,one should test the _____ and get a _____.
A)price elasticity of demand; number less than −1
B)income elasticity of demand; positive number
C)cross-price elasticity of demand; negative number
D)price elasticity of demand; number greater than −1
E)cross-price elasticity of demand; positive number

Question

Quizplus · Accepted Answer

To prove that Coca-Cola and 7UP are substitutes, one should test the cross-price elasticity of demand. If the cross-price elasticity of demand is positive, it indicates that as the price of one good increases, the demand for the other good also increases, which is characteristic of substitute goods.

In Order to Prove That Coca-Cola and 7UP Are Substitutes,one