The substitution effect holds that an increase in the price of a commodity will cause an individual to search for substitutes.

Name: The substitution effect holds that an increase in the price of a commodity will cause an individual to search for substitutes.
Brand: Quizplus
Rating: 4.9 (37 reviews)

Question

Quizplus · Accepted Answer

The substitution effect describes how consumers will replace more expensive items with cheaper substitutes when prices rise, maintaining their consumption levels as much as possible.

The Substitution Effect Holds That an Increase in the Price