"Because Coke and Pepsi Are Substitutes,a Decrease in the Price

question 214

Multiple Choice

"Because Coke and Pepsi are substitutes,a decrease in the price of Pepsi will cause the demand for Coke to decrease.This initial shift in demand for Coke results in a lower price for Coke; this lower price will cause the demand curve for Coke to shift to the left." Which of the following correctly comments on this statement?

• A)The statement will be true if consumer tastes for Coke and Pepsi do not change.
• B)The statement is false because a change in the price of Coke would not change the demand for Coke.
• C)The statement is false because Pepsi is an inferior good; Coke is a normal good.
• D)The statement is false because one cannot assume that Coke and Pepsi are substitutes for all consumers.

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Definitions:

Complimented

Having been praised or positively remarked upon, typically regarding one's actions or attributes.

Stranger

An individual who is not known personally or is unfamiliar to someone else.

Symmetrical

Having identical form or arrangement on both sides of a dividing line or plane.

Physically Attractive

Pertaining to characteristics of a person's appearance that are appealing or desirable to others.