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Question

The prices of a can of Pepsi and Coke are both Rs 20. If the price of Pepsi changes to Rs 25, what do you think will happen to the number of people who drink coke?


  1. Increases

  2. Decreases

  3. Remains same

  4. Cannot say


Solution

The correct option is A

Increases


Pepsi and Coke are similar products and one could be used in place of the other. Hence, if the price of Pepsi increases relative to Coke, more people are likely to buy Coke as it is relatively cheaper. Hence, the number of people who drink Coke increases.

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