If the price of Pepsi decreases relative to the price of Coke and 7-Up, the demand for

A. Coke will decrease
B. 7-Up will decrease
C. Coke and 7-Up will increase
D. Coke and 7-Up will decrease
Answer» D. Coke and 7-Up will decrease
Explanation: Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. A decrease in the price of a good normally results in an increase in the quantity demanded by consumers because of the law of demand, and conversely, quantity demanded decreases when price rises. So, here the decrease in price of Pepsi will increase in demand for it, while the demand for Coke and 7-Up will decrease because of no change in their price level.
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