Question

One study found that the price elasticity of demand for soda is minus−​0.78, while the price elasticity of demand for​ Coca-Cola is minus−1.22. ​Source: Kelly D.Brownell and Thomas R.​Frieden,"Ounces of Preventionlong dash—The Public Policy Case for Taxes on Sugared​ Beverages," New England Journal of Medicine​, April​ 30, 2009, pp. 1805minus−1808. The price elasticity of​Coca-Cola is ​(interpret the absolute value of these​elasticitiies, i.e., ignore the minus sign​):

Answer 1

Please see the explanation below .

Step-by-step explanation:

By evaluating the absolute values of the price elasticities we can see that the price elasticity of demand for Coca-Cola at 1.22 is greater than the price elasticity of demand for soda at 0.78. this happens because a soda is basically a broadly defined food which has relatively no close substitute while Coca-Cola is a narrowly defined good with a number of substitutes available. Due to this reason, demand for Coca-Cola is relatively more elastic