Multiple Choice
The cross price elasticity of demand for Coke with respect to the price of Pepsi has been estimated to be 0.61.If the price of Pepsi falls by 10 percent in a period, how will that affect the demand for Coke in that period, all other things unchanged?
A) The demand for Coke will increase but by less than 6.1 percent.
B) The demand for Coke will increase by 6.1 percent.
C) The demand for Coke will not change because many people prefer Coke over Pepsi.
D) The demand for Coke will fall.
Correct Answer:
Verified
Correct Answer:
Verified
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