A 10 Percent Increase in the Price of Root Beer

question 45

Multiple Choice

A 10 percent increase in the price of root beer causes a 5 percent increase in the quantity demanded of orange soda.This means that

• A)root beer and orange soda are substitutes
• B)root beer and orange soda are complements
• C)the cross-price elasticity of demand is elastic
• D)the cross-price elasticity of demand is equal to 2
• E)the cross-price elasticity of demand is equal to -2

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Definitions:

Marketable Securities

Financial instruments that can be easily converted into cash at a reasonable price in the short term.