The article on the price cuts for the iPhone indicates that
A)The cross-price elasticity for iPhones and other cell phones produced by Palm and Motorola was negative.
B)Apple lowered the price for the iPhone because the cross-price elasticity between it and the other competitors was positive.
C)The percentage change in the quantity demanded for the substitute cell phones was increasing less than the percentage change in the price.

Question

Quizplus · Accepted Answer

The article states that Apple lowered the price for the iPhone because "the cross-price elasticity between the iPhone and other cell phones had become positive." This suggests that as the price of the iPhone went up, demand for substitutes (such as Palm and Motorola phones) went up as well. By cutting the price of the iPhone, Apple hoped to increase demand for its own product and better compete with these substitutes.

The Article on the Price Cuts for the IPhone Indicates