After a $5 Million Ad Campaign, Coca-Cola Measured Its Effectiveness

question 201

Multiple Choice

After a $5 million ad campaign, Coca-Cola measured its effectiveness by calculating the cross elasticity of demand between Coke and Pepsi.A successful campaign would be indicated if the cross elasticity went from

• A)0.9 to 0.5.
• B)0.9 to 1.5.
• C)−0.5 to −0.2.
• D)−0.9 to −1.5.

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Definitions:

Supply

The total amount of a good or service available for purchase at any given price level in a market.

Inelastic Demand

A situation where the quantity demanded of a good or service changes very little when its price changes.

Luxury

Goods or services that are considered superior in quality and are often expensive, catering to a more affluent consumer base.

Necessity

A good or service that is considered essential for survival, such as food, shelter, and healthcare.