You are the new vice president in charge of advertising at Taco Bell. In your upcoming advertising campaign, you plan to degrade the fast food competitor whose product is the closest substitute for Taco Bell's tacos. That would be the fast food chain whose cross elasticity of demand with your tacos is equal to
A) negative 2.11.
B) negative 1.75.
C) positive 1.55.
D) positive 1.00.

Question

Quizplus · Accepted Answer

Cross elasticity of demand is positive for substitute goods, indicating that an increase in the price of one leads to an increase in the demand for the other.

You Are the New Vice President in Charge of Advertising