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    Economics pricing

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    Please help with the following problem.

    Explain what would happen to equilibrium price and quantity in the market for Pepsi if the following occurred (be sure to indicate WHY it happens as well):

    a. The price of Coke decreases.

    b. Average household income falls from $50,000 to $43,000

    c. There are improvements in soft-drink bottling technology.

    d. The price of sugar increases and the Pepsi launches an extremely successful advertising campaign.

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    https://brainmass.com/economics/technology/economics-pricing-equilibrium-price-quantity-market-448021

    Solution Preview

    a. The price of Coke decreases.

    When the price of Coke (a substitute) decreases, more people would now buy coke instead of Pepsi. For Pepsi, its demand curve would shift down. That leads to a lower price and a lower quantity demanded.

    b. Average household income falls from $50,000 to $43,000

    When income drops, people have less money to spend, and their demand (for every) ...

    Solution Summary

    This solution answers questions about economic pricing. It helps explain what would happen to equilibrium price and quantity in the market for Pepsi if the price of Coke decreases, average household income falls from $50,000 to $43.000, there are improvements in soft-drink bottling technology, and the price of sugar increases.

    $2.19