The quantity demanded of Pepsi has decreased. The best explanation for this is thatA.Pepsi's advertising is not as effective as in the past.B.the price of Coca-Cola has increased.C.Pepsi consumers had an increase in income.D.the price of Pepsi has increased.
Question
The quantity demanded of Pepsi has decreased. The best explanation for this is thatA.Pepsi's advertising is not as effective as in the past.B.the price of Coca-Cola has increased.C.Pepsi consumers had an increase in income.D.the price of Pepsi has increased.
Solution
The best explanation for the decrease in the quantity demanded of Pepsi is D. the price of Pepsi has increased.
Here's why:
A. If Pepsi's advertising was not as effective as in the past, it might lead to a decrease in demand, but it's not the most direct explanation. Advertising can influence brand preference and purchase intentions, but it doesn't always directly affect the quantity demanded.
B. If the price of Coca-Cola (a substitute good) increased, we would expect the demand for Pepsi to increase, not decrease. People would likely switch to Pepsi if Coca-Cola became more expensive.
C. If Pepsi consumers had
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