The substitution effect says:
A)when the price of a beef increases, consumers will tend to substitute with chicken.
B)when the price of a beef increases, consumers will tend not to substitute.
C)when the price of a beef increases, consumers will tend to eat more beef.
D)when the price of a beef decreases, consumers will tend to substitute with chicken.
E)none of the above.

Question

Quizplus · Accepted Answer

The substitution effect states that when the price of a good increases, consumers will tend to substitute it with a cheaper alternative good. Hence, when the price of beef increases, consumers are likely to substitute it with chicken, which is a cheaper alternative.

The Substitution Effect Says