Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The demand curve for the related product will shift to the right.
B
The demand curve for the related product will shift to the left.
C
The demand curve for the related product will remain unchanged.
D
The demand curve for the related product will become perfectly elastic.
Understanding the Answer
Let's break down why this is correct
Answer
When the price of a substitute falls, people switch to the cheaper option, so the related product’s demand falls. This causes its demand curve to shift leftward, showing lower quantity demanded at each price. The shift is bigger if the substitute is highly elastic, meaning consumers are very responsive to price changes. For example, if the price of bottled water drops, fewer people buy flavored drinks, so the flavored drink’s demand curve moves left.
Detailed Explanation
When a substitute becomes cheaper, people switch to it. Other options are incorrect because Some think a cheaper substitute makes the related product more popular; It is easy to think nothing changes when a substitute price falls.
Key Concepts
determinants of demand
substitute goods
elasticity of demand
Topic
Shifts in Demand Curve
Difficulty
hard level question
Cognitive Level
understand
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