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The Cross-Price Elasticity Between Soda and Salty Chips Is -3

question 38

True/False

The cross-price elasticity between soda and salty chips is -3. From this we can tell that the demand for salty chips is elastic.


Definitions:

Price Taker

A buyer or seller that is unable to influence the market price of a product or service.

Marginal Revenue Curve

A graphical representation showing how the revenue from selling one more unit of a good or service changes as production volume changes.

Price-searcher Firm

A company that has the ability to set the price for its products because it does not face perfect competition.

Marginal Revenue

The increase in revenue that results from the sale of one additional unit of product.

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