Final answer:
An increase in the prices of Coca-Cola will increase the demand for Pepsi-Cola, as it acts as a substitute and people will look for a more affordable alternative.
Step-by-step explanation:
If Coca-Cola and Pepsi are substitutes, an increase in the prices of Coca-Cola will increase the demand for Pepsi-Cola as people substitute Pepsi for the higher priced Coke. This is based on the concept that a substitute is a good or service that can be used in place of another. In the case of the price of one substitute rising, consumers tend to shift their consumption towards the other, more affordable substitute. For instance, as the price of tablet computers has fallen, people have been purchasing them in lieu of laptops, causing a decrease in the demand for laptops. Similarly, if the price of Coca-Cola increases, the demand for Pepsi-Cola is expected to increase because consumers will start looking for a cheaper alternative to quench their thirst.