If Coke and Pepsi are close substitutes, then if:
A) Coke raises its price, so will Pepsi.
B) Coke raises its price, it will not lose customers to Pepsi.
C) Pepsi lowers its price, it will not hurt Coke.
D) Coke raises its price, some customers will switch to Pepsi.

Question

Quizplus · Accepted Answer

If Coke raises its price, some customers may switch to Pepsi as a substitute, hence Pepsi may gain market share. Therefore, D is the best choice as it states that some customers will switch to Pepsi if Coke raises its price.

If Coke and Pepsi Are Close Substitutes, Then If