When the relative price of a good decreases,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 decreases, it becomes relatively cheaper compared to its substitutes. This leads to an increase in the quantity demanded of the good and a decrease in the quantity demanded of its substitutes. Therefore, consumers respond by buying a larger quantity of that good and a smaller quantity of substitutes for that good.

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