Question #117332

The cross elasticity of demand for a popular brand of a cola drink has been estimated to be +1.8 and for an iced tea to be +0.8, explain what each means

Expert's answer

The greater the interchangeability of the two goods, the greater the value of the cross elasticity of demand for price.

Consequently, cola is able to replace the test drink more than iced tea.


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Canada #340153 on Dec 2023