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.

Answer: (C)

Verified step by step guidance

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.
2. Step 2: Identify the good in question, which is Pepsi, and note that its price is decreasing due to a sale.
3. 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.
4. Step 4: Recognize that the quantity demanded changes along the demand curve in response to price changes, rather than shifting the demand curve itself.
5. 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.