Members of Alpha fraternity have developed a strong liking for Coca-Cola. Beta fraternity members buy the same amount of Coke but believe Pepsi is just about as good. From this, we can infer that
A) Alpha members will not care what the price of Coke is.
B) compared to Alpha members, Betas will have a smaller price elasticity of demand for Coke.
C) compared to Alpha members, Betas will have a larger price elasticity of demand for Coke.
D) Alpha members will increase their purchases by a larger amount of Pepsi than Beta members in response to a "50 cents off" sale on a case of Pepsi.

Question

Quizplus · Accepted Answer

Beta members view Pepsi as a close substitute for Coke, so they are more sensitive to price changes of Coke, resulting in a larger price elasticity of demand compared to Alpha members who have a strong preference for Coke.

Members of Alpha Fraternity Have Developed a Strong Liking for Coca-Cola