In March 2012,the state of California started requiring that all packaging for food and drink with the additive 4-methylimidazole (4-MI) be clearly labeled with a cancer warning.Because of this,both Pepsi and Coke changed their formula to eliminate 4-MI as an ingredient.If Pepsi and Coke did NOT change their formula,holding all else constant,what do you think would have happened to the demand for these goods,assuming Pepsi and Coke were in a competitive market?

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Quizplus · Accepted Answer

The inclusion of a cancer warning label on the packaging for food and drink with the additive 4-MI would likely cause a decrease in demand for those products, as consumers may be hesitant to purchase goods that could potentially harm their health. If Pepsi and Coke did not change their formula and continued to use 4-MI, their products would likely see a decrease in demand, causing the demand curve to shift to the left. As a result, both the price of the products and the profits for the companies would decrease.

In March 2012,the State of California Started Requiring That All