If the price of Pepsi rises, we expect the price of Coke to rise because the products are substitutes.

Question

Quizplus · Accepted Answer

Pepsi and Coke are substitutes, meaning they compete against each other for consumer demand. When the price of one increases, consumers may switch to the other, causing an increase in demand and a price increase for the other product. Therefore, we would expect the price of Coke to also rise if the price of Pepsi rises.

If the Price of Pepsi Rises, We Expect the Price