The value of cross elasticity of demand between orange soda and grape soda is:
A) negative.
B) positive.
C) 0.
D) between −1 and 0.
E) less than −1.

Question

Quizplus · Accepted Answer

Cross elasticity of demand measures the responsiveness of the demand for a good to a change in the price of a related good. Orange soda and grape soda are substitutes, meaning that they can be used in place of each other. Therefore, a change in the price of one will affect the demand for the other. This means that the cross elasticity of demand between orange soda and grape soda is positive.

The Value of Cross Elasticity of Demand Between Orange Soda