Use the table below to answer the following questions.
Table 4.2.2
-Refer to Table 4.2.2.All of the following statements regarding Jolt are true except
A)it has an elastic demand.
B)it is an inferior good.
C)it is a substitute for Coke.
D)it has a negative cross elasticity of demand with respect to the price of Coke.
E)it has a negative income elasticity of demand.

Question

Use the table below to answer the following questions.
Table 4.2.2 
-Refer to Table 4.2.2.All of the following statements regarding Jolt are true except
A)it has an elastic demand. 
B)it is an inferior good. 
C)it is a substitute for Coke. 
D)it has a negative cross elasticity of demand with respect to the price of Coke. 
E)it has a negative income elasticity of demand.

Quizplus · Accepted Answer

A negative cross elasticity of demand with respect to the price of Coke would imply that Jolt and Coke are complements, which contradicts the statement that Jolt is a substitute for Coke. Substitutes have a positive cross elasticity of demand, meaning if the price of one goes up, the demand for the other increases.

Use the Table Below to Answer the Following Questions