Question : The cross elasticity of demand between CocaCola and PepsiCola is ________ so Coke and Pepsi are ________.
Option 1: Positive; complements
Option 2: Negative; substitutes
Option 3: Negative; complements
Option 4: Positive; substitutes
Correct Answer: Positive; substitutes
Solution :
A product or service that consumers perceive to be substantially the same as or sufficiently similar to another product is referred to as a substitutable good.
Hence coke and Pepsi Cola are substitute goods and they have a positive relationship.
So option d is the correct answer.
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