Question

If the price of Pepsi decreases relatively the price of Coke and $7$-Up, the demand for.

• A. Coke will decrease
• B. $7$-Up will decrease
• C. Coke and $7$-Up will increase
• D. Coke and $7$-Up will decrease

Answer 1

The correct option is D Coke and $7$-Up will decrease

Pepsi and coke and $7$-Up are substitute goods and there is a positive relationship between demand and price of a substitute good. Thus with the decrease in the price of Pepsi demand for coke and $7$-Up also decreases.