The substitution effect means consumers substitute good A for Good B if Good A is
A)relatively more expensive.
B)of higher quality.
C)more closely aligned with the natural level of real output.
D)relatively cheaper.

Question

Quizplus · Accepted Answer

The substitution effect occurs when the price of a good decreases relative to the price of another good, causing consumers to switch from the more expensive good to the cheaper one. Therefore, the correct choice is D, as it reflects the definition of the substitution effect.

The Substitution Effect Means Consumers Substitute Good a for Good