If Pepsi goes on sale and its price decreases, what is the most likely effect on the quantity demanded of Pepsi, assuming all other factors remain constant?
A
The quantity demanded of Pepsi will become zero.
B
The quantity demanded of Pepsi will remain unchanged.
C
The quantity demanded of Pepsi will increase.
D
The quantity demanded of Pepsi will decrease.
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1
Step 1: Understand the Law of Demand, which states that, ceteris paribus (all other factors held constant), when the price of a good decreases, the quantity demanded of that good typically increases.
Step 2: Identify the good in question, which is Pepsi, and note that its price is decreasing due to a sale.
Step 3: Apply the Law of Demand to Pepsi: since the price of Pepsi falls, consumers are more likely to buy more of it, increasing the quantity demanded.
Step 4: Recognize that the quantity demanded changes along the demand curve in response to price changes, rather than shifting the demand curve itself.
Step 5: Conclude that the most likely effect of a price decrease for Pepsi, assuming all other factors remain constant, is an increase in the quantity demanded of Pepsi.