Julie always purchases the soda with the lowest price. For Julie, the cross price elasticity of demand for brand X and brand Y will be
A) equal to 0.
B) negative.
C) positive.
D) impossible to determine without more information.

Question

Quizplus · Accepted Answer

The cross price elasticity of demand is positive for substitute goods. Since Julie always buys the cheapest soda, brand X and brand Y are substitutes for her.

Julie Always Purchases the Soda with the Lowest Price