Assume that a retailer sells 800 six packs of Dr. Pepper per day at a price of $3.00/six-pack. You, as an economic analyst, estimate that the cross-price elasticity between Dr. Pepper and Coca-Cola is 0.6. If the retailer raises the price of Coca-Cola by
10%, how would the sales of Dr. Pepper be affected, ceteris paribus?
A) Sales of Dr. Pepper would rise by 48 six-packs B) Sales of Dr. Pepper would rise by 10%
C) Sales of Dr. Pepper would fall by 48 six-packs D) None of the above
Answer: A
Economics
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