Final answer:
The correct answer is that a decrease in the price of Pepsi will (C) shift the demand curve for Coca-Cola to the left.
Step-by-step explanation:
Given that Pepsi and Coca-Cola are substitute goods, a decrease in the price of Pepsi is expected to shift the demand curve for Pepsi to the right, as more consumers will find Pepsi more attractive due to its lower price. This situation is referred to as substitution effect, where consumers shift their preference towards a cheaper alternative when the price of that alternative decreases.
In contrast, the demand curve for Coca-Cola will shift to the left. This shift represents a decrease in demand for Coca-Cola because consumers will be purchasing more Pepsi instead, due to its lower price. This does not affect the supply of Coca-Cola, only the quantity demanded at each price point.