📚 Learning Guide
Understanding Demand and Supply
easy

If the price of a substitute good decreases, what is most likely to happen to the demand for the original good?

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Learning Path

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Choose the Best Answer

A

Demand for the original good will decrease

B

Demand for the original good will increase

C

Demand for the original good will remain unchanged

D

Demand for the original good will fluctuate unpredictably

Understanding the Answer

Let's break down why this is correct

Answer

When the price of a substitute good decreases, people are more likely to buy that substitute instead of the original good. This happens because consumers often look for the best deal, and if one product costs less, they may choose it over another similar product. For example, if the price of margarine drops, people might buy more margarine instead of butter. As a result, the demand for butter would likely decrease because fewer people want to buy it when they can get margarine for a lower price. This shows how prices of related products can influence what consumers choose to buy.

Detailed Explanation

When the price of a substitute good goes down, people will buy more of that substitute. Other options are incorrect because Some might think that lower prices always increase demand; It's a common mistake to think that demand stays the same.

Key Concepts

Demand and Supply
Elasticity of Demand
Substitute Goods
Topic

Understanding Demand and Supply

Difficulty

easy level question

Cognitive Level

understand

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