In order to prove that Coca Cola and 7-Up are substitutes, one should test the _____ and get a _____.
A)price elasticity of demand; number less than −1
B)income elasticity; positive number
C)cross-price elasticity; negative number
D)price elasticity of demand; number greater than −1
E)cross-price elasticity; positive number

Question

In order to prove that Coca Cola and 7-Up are substitutes, one should test the _____ and get a _____.​
A)price elasticity of demand; number less than −1
B)income elasticity; positive number
C)cross-price elasticity; negative number
D)price elasticity of demand; number greater than −1
E)cross-price elasticity; positive number

Quizplus · Accepted Answer

To prove that Coca Cola and 7-Up are substitutes, one should test the cross-price elasticity, which measures the responsiveness of the quantity demanded of one product (in this case, Coca Cola) to a change in the price of another product (7-Up). The sign of the cross-price elasticity will indicate whether the two products are substitutes or complements. If the cross-price elasticity is positive, it means that a rise in the price of 7-Up leads to an increase in the quantity demanded of Coca Cola, suggesting that the two products are substitutes.

In Order to Prove That Coca Cola and 7-Up Are