If the Price of Coke Rises by 5 Percent and the Sales

question 57

Multiple Choice

If the price of Coke rises by 5 percent and the sales of Pepsi go up by 10 percent,we can conclude that

• A)The sign on the cross-price elasticity will be negative.
• B)Both goods are normal goods.
• C)Both goods are substitute goods because the cross-price elasticity is +0.5.
• D)Both goods are substitute goods because the cross-price elasticity is +2.

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