Final answer:
The cross elasticity of demand between Pepsi and Coke should be positive because they are substitute goods. Higher prices for one lead to increased demand for the other.
Step-by-step explanation:
We would expect the cross elasticity of demand between Pepsi and Coke to be positive. This is because Pepsi and Coke are substitute goods, meaning that an increase in the price of one would statistically lead to an increase in the quantity demanded of the other. When considering substitute goods in the context of cross-price elasticity of demand, it's understood that if the price of good A (e.g., Coke) increases, consumers will turn to its substitute, good B (e.g., Pepsi), thereby increasing demand for Pepsi.