If the price of Pepsi falls, the price of Coke ________ because ________.
A) falls; Coke and Pepsi are complements
B) falls; Coke and Pepsi are substitutes
C) falls; Coke is a normal good
D) rises; Coke and Pepsi are substitutes
E) rises; Coke is an inferior good

Question

Quizplus · Accepted Answer

Coke and Pepsi are substitutes, meaning that they are similar products and consumers may choose one over the other. If the price of one falls, consumers may switch to that cheaper option, leading to a decrease in demand for the other product and thus a decrease in its price as well.

If the Price of Pepsi Falls, the Price of Coke