Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Demand for the original good will decrease because consumers will buy the cheaper substitute.
B
Demand for the original good will increase as consumers prefer higher-priced options.
C
Demand for the original good will remain unchanged since prices are not directly related.
D
Demand for the original good will increase due to the perception of quality.
Understanding the Answer
Let's break down why this is correct
Answer
When the price of a substitute good decreases, the demand for the original good is likely to decrease as well. This happens because consumers will find the cheaper substitute more attractive and may choose to buy it instead of the original good. For example, if the price of tea drops, people might buy more tea instead of coffee, which is the original good. As a result, the demand for coffee would go down because fewer people are choosing it over the now cheaper tea. This relationship shows how changes in the price of one good can directly impact the demand for another related good.
Detailed Explanation
When a substitute good gets cheaper, people will buy it instead of the original good. Other options are incorrect because Some might think that higher prices attract buyers; It's a common mistake to think prices don't affect demand.
Key Concepts
Price Elasticity of Demand
Substitutes and Complements
Consumer Behavior
Topic
Elasticity Formulas and Relationships
Difficulty
hard level question
Cognitive Level
understand
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