Final answer:
If the price of Pepsi increases, the equilibrium price and quantity of Coca-Cola will both increase under the ceteris paribus assumption, as consumers switch to Coca-Cola, a substitute good.
Step-by-step explanation:
The question addresses the concept of market equilibrium and how an increase in the price of one good can affect a related good's market. Specifically, it asks what will happen to the equilibrium price and quantity of Coca-Cola if the price of Pepsi increases, assuming all other factors remain unchanged (ceteris paribus). Given that Pepsi and Coca-Cola are substitute goods, an increase in the price of Pepsi is likely to lead to an increase in the demand for Coca-Cola.
Consequently, the equilibrium price of Coca-Cola will increase, because consumers will be willing to pay more for it as an alternative to the now more expensive Pepsi. At the same time, the equilibrium quantity of Coca-Cola will also increase because there will be a higher demand at the new higher price. Therefore, the correct answer is B: increase; increase.