Answered: positive, that is, Coke and Pepsi are…

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positive, that is, Coke and Pepsi are substitutes.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 5SQP: Suppose a university raises its tuition from 3,000 to 3,500. As a result, student enrollment falls...

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Question

If a 4 percent rise in the price of peanut butter lowers the total revenue received by the producers of peanut butter by 4 percent, the demand for peanut butter is

a. elastic.

b. inelastic

2. The cross elasticity of demand between Coca-Cola and Pepsi-Cola is

a. negative, that is, Coke and Pepsi are substitutes

b. positive, that is, Coke and Pepsi are substitutes.

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