If a lower price for a Pepsi decreases the demand for a Coke,the cross elasticity value for Pepsi and Coke is
A) definitely negative.
B) definitely equal to zero.
C) definitely positive.
D) definitely greater than one.
E) possibly negative, positive, or zero, but there is not enough information to decide.

Question

Quizplus · Accepted Answer

If a lower price for Pepsi decreases the demand for Coke, it means that Pepsi and Coke are substitute goods. Therefore, the cross elasticity of demand between Pepsi and Coke is positive.

If a Lower Price for a Pepsi Decreases the Demand