Q350
If the price of Pepsi decreases relative to the price of Coke and 7-Up, the demand for
A.
Coke will rise
B.
7-Up will decrease
C.
Coke and 7-Up will increase
D.
Coke and 7-Up will decrease
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
If the price of Pepsi decreases relative to the price of Coke and 7-Up, the demand for Coke and 7-Up will decrease. A decrease in the price of a good normally results in an increase in the quanti ty demanded by consumers because of the law of demand, and conversel y, quant ity demanded decreases when price rises. So. here the decrease in price of Pepsi will increase in demand for it, while the demand for Coke and 7-Up will decrease because of no change in their price level.