If two products are substitutes a decrease in price of one will:
A) Lead to a movement along the demand curve of the other.
B) Reduce supply of the other.
C) Shift demand for the other inwards.
D) Shift demand for the other outwards.

Question

Quizplus · Accepted Answer

When two products are substitutes, a decrease in the price of one product makes it more attractive relative to the other, causing consumers to switch their preference to the cheaper option. This results in a decrease in demand for the other product, hence shifting its demand curve inwards.

If Two Products Are Substitutes a Decrease in Price of One