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Question
If Coke and Fanta are close substitutes to each other, a rise in price of Coke will lead to ______ for Fanta.
Options
Decrease in demand.
Increase in demand.
Increase in quantity supplied.
No change in demand.
Solution
If Coke and Fanta are close substitutes to each other, a rise in price of Coke will lead to Increase in demand for Fanta.
Explanation: Since Fanta and Coke are close choices, any increase in Coke's price will result in a rise in Fanta's demand. This is a result of customers switching from coke to Fanta in terms of demand as the price of coke increases.
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