CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

If the quantity of Snapple's drinks demanded falls from 4.0 million to 3.0 million as the price of Nantucket Nectar's drinks fall from $2.70 to $2.50, Snapple's drinks and Nantucket Nectar's drinks are ______.
A. substitutes
B. complements
C. luxuries
Explanation: Since the cross price elasticity of demand for Snapple's drinks and Nantucket Nectar's drinks is positive, they are substitutes.

User Contributed Comments 2

User Comment
danlan They cut price at the same time, which means there are some competitions between them, thus they are substitutes.
danlan When price of Nantucket falls, demand of Nantucket increases and demand of Snapple decreases so they are substitute.
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