Identify a true statement about substitutes.
A)Substitutes put upward pressure on the price that firms in an industry can charge.
B)Substitutes give a firm the freedom to charge customers high prices for their products.
C)It is a product with the same basic characteristics and is made using the same general set of inputs.
D)It is a product that is fundamentally different yet serves the same basic function as another product.

Question

Quizplus · Accepted Answer

Substitutes are products that serve the same basic function but are different in nature. This means that if the price of one product increases, consumers can switch to the substitute product, maintaining their ability to fulfill the same need or desire.

Identify a True Statement About Substitutes