Assume that Coca-Cola and Pepsi-Cola are substitutes. A rise in the price of Coca-Cola will have which of the following effects on the market for Pepsi?
a. A movement down along the Pepsi demand curve.
b. A rightward shift in the Pepsi demand curve.
c. A movement up along the Pepsi demand curve.
d. A leftward shift in the Pepsi demand curve.
b
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If asset markets are driven by the "animal spirits" of investors, then
a. those markets reflect rational behavior. b. those markets reflect irrational behavior. c. the efficient markets hypothesis is correct. d. the stock market exhibits informational efficiency.
A necessary condition for the economy to be self-regulating is that
A) wages must be relatively high. B) the labor market must always be in equilibrium. C) the interest rate must be above its equilibrium level. D) wages must be flexible in both an upward and downward direction. E) none of the above