If Pepsi decided to raise its price, you would expect the price of Coca Cola
A) to fall.
B) to raise.
C) Their prices should have no relationship because Pepsi and Coca Cola are not related.
D) None of the above answers are correct.

Question

Quizplus · Accepted Answer

Pepsi and Coca Cola are substitute goods. If Pepsi raises its price, consumers may switch to Coca Cola, increasing its demand and potentially leading to a price increase for Coca Cola as well.

If Pepsi Decided to Raise Its Price, You Would Expect