Answer to Question #127775 in Microeconomics for FATIMA

Question

Colgate sells its standard size toothpaste for Rs. 25. Its sales have been on an average 8000 units per month over the last year. Recently, its competitor Sparkle reduced the price of its same standard size toothpaste from Rs. 35 to Rs. 30. As a result Colgate sales declined by 1500 units

Answer 1

Due to decrease in price for sparkle it leads to increase in demand supply surpassing the demand of Colgate where the demand for Colgate which as the standard price of Rs.25.

This results to decrease in price for Colgate to (8000 -1500=6500) visa a visa increase of demand of sparkle.