When the relative price of a good increases,consumers respond by buying
A)a larger quantity of that good and a larger quantity of substitutes for that good.
B)a larger quantity of that good and a smaller quantity of substitutes for that good.
C)a smaller quantity of that good and a larger quantity of substitutes for that good.
D)a smaller quantity of that good and a smaller quantity of substitutes for that good.

Question

Quizplus · Accepted Answer

When the relative price of a good increases, consumers tend to buy a smaller quantity of that good due to its higher price. Additionally, they would look for substitutes for that good which are relatively cheaper, leading to a larger quantity of substitutes being bought. Therefore, option C is the correct choice.

When the Relative Price of a Good Increases,consumers Respond by Buying